Sinotrans : CONTINUING CONNECTED TRANSACTIONS-NEW MASTER PURCHASE AGREEMEN

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.

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

(Stock Code: 0598)

CONTINUING CONNECTED TRANSACTIONS -

NEW MASTER PURCHASE AGREEMENT

THE NEW MASTER PURCHASE AGREEMENT

Reference is made to the announcement of the Company dated 29 October 2018 in respect of the Original Agreement entered into between the Company and China Merchants Property, pursuant to which the Group may purchase the Office Supplies and Equipment from China Merchants Property through the Online Platform from 1 July 2018 to 31 December 2020.

Due to the business restructuring, the Online Platform which carries primarily general office supplies and equipment and certain household appliances and food and beverage goods was transferred to Daojiahui Technology Company by China Merchants Property on 1 April 2020, and the Online Platform has been operated by Daojiahui Technology Company since then. In order to monitor and regulate the transactions in relation to the purchase of Office Supplies and Equipment by the Group through the Online Platform from time to time and ensure compliance with the Listing Rules, on 27 August 2020, the Company entered into the New Master Purchase Agreement with Daojiahui Technology Company, pursuant to which, the Group may purchase the Office Supplies and Equipment from Daojiahui Technology Company through the Online Platform for the period from 1 April 2020 to 31 December 2022.

IMPLICATIONS UNDER THE LISTING RULES

As at the date of this announcement, Daojiahui Technology Company is a wholly-owned subsidiary of China Merchants Property Operation, which is owned as to 51.16% by CMG. As CMG is the ultimate controlling shareholder of the Company holding in aggregate approximately 57.61% of the total issued share capital of the Company as at the date of this announcement, Daojiahui Technology Company is a connected person of the Company and the transactions contemplated under the New Master Purchase Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

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As the highest applicable percentage ratios (as defined under the Listing Rules) in respect of the highest annual cap for the transactions contemplated under the New Master Purchase Agreement is more than 0.1% but less than 5%, such transactions are subject to the reporting, announcement and annual review requirements but exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

None of the Directors had any material interest in the New Master Purchase Agreement, and therefore they are not required under the Listing Rules to abstain from voting on the relevant Board resolution. Nonetheless, as Mr. Song Dexing, Mr. Su Jian, Mr. Xiong Xianliang and Mr. Jiang Jian, being the directors of the Company, are concurrently holding positions in CMG, they have abstained from voting at the relevant Board resolution in accordance with the relevant PRC laws and regulations.

BACKGROUND

Reference is made to the announcement of the Company dated 29 October 2018 in respect of the Original Agreement entered into between the Company and China Merchants Property, pursuant to which the Group may purchase the Office Supplies and Equipment from China Merchants Property through the Online Platform from 1 July 2018 to 31 December 2020.

Due to the business restructuring, the Online Platform which carries primarily general office supplies and equipment and certain household appliances and food and beverage goods was transferred to Daojiahui Technology Company by China Merchants Property on 1 April 2020, and the Online Platform has been operated by Daojiahui Technology Company since then. In order to monitor and regulate the transactions in relation to the purchase of Office Supplies and Equipment by the Group through the Online Platform from time to time and ensure compliance with the Listing Rules, on 27 August 2020, the Company entered into the New Master Purchase Agreement with Daojiahui Technology Company, pursuant to which, the Group may purchase the Office Supplies and Equipment from Daojiahui Technology Company through the Online Platform for the period from 1 April 2020 to 31 December 2022.

THE NEW MASTER PURCHASE AGREEMENT

Date

27 August 2020

Parties

1. the Company, as the purchaser
2. Daojiahui Technology Company, as the vendor

Subject Matter

The Group may, during the period from 1 April 2020 to 31 December 2022, purchase the Office Supplies and Equipment, including but not limited to office stationery such as paper and pen,

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computers, printers and printing supplies etc., from Daojiahui Technology Company through the Online Platform.

Pricing

Goods available on the Online Platform are sold at prevailing market prices and Daojiahui Technology Company is required to ensure that the goods sold to the Group must not be at a price higher than that available to the general public.

Settlement

The Group is able to make purchases through the Online Platform on credit. Settlement of purchases is to be made on a deferred basis and the Group can enjoy a credit period of up to 50 days.

GENERAL PRCING POLICY

The Group has, to the extent comparable, compared the prices and other service terms such as delivery policy with respect to the Office Supplies and Equipment available on the Online Platform with those for similar products quoted by its existing suppliers which are e-commerce online retailers in the PRC, being Independent Third Parties, and noted that the prices offered by Daojiahui Technology Company are generally within the price range offered by the independent suppliers and the terms of the New Master Purchase Agreement are comparable with the prevailing market price and market terms. The Group will seek updated quotations from independent suppliers on a regular basis in order to ensure that the prices for the Office Supplies and Equipment offered on the Online Platform are comparable to the prevailing market price.

HISTORICAL TRANSACTION RECORDS UNDER THE ORIGINAL AGREEMENT

The costs on the purchases of the Office Supplies and Equipment incurred under the Original Agreement were as follows:

From 1 July 2018 to 31	From 1 January 2019 to 31	From 1 January 2020 to
December 2018	December 2019	31 March 2020
RMB19,105,900.00	RMB10,200,277.29	RMB5,914,717.08

Note: The historical transaction figures for the six months from 1 July 2018 to 31 December 2018 and for the year ended 31 December 2019 are audited figures of the Group and the figure for the three months ended 31 March 2020 is derived from the internal management accounts of the Group.

As the Online Platform was no longer operated by China Merchants Property since 1 April 2020, there has been no new transaction conducted by the Group under the Original Agreement thereafter. After entering into the New Master Purchase Agreement, the transactions in relation to the purchase of the Office Supplies and Equipment by the Group through the Online Platform will be regulated by the New Master Purchase Agreement, subject to the proposed annual caps under the New Master Purchase Agreement (as elaborated in the section below). As such, the original annual cap for the year ending 31 December 2020 under the Original Agreement is no longer applicable. The Board further confirms that, as at 31 March 2020, the actual transaction amount has not exceeded the original annual cap for the year ending 31 December 2020 under the Original Agreement.

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Since 1 April 2020, the Group has been making purchases of Office Supplies and Equipment through the Online Platform from Daojiahui Technology Company from time to time, and the actual transaction amount is RMB15,870,142.63 as at 31 July 2020 accrording to the internal management accounts of the Group.

PROPOSED ANNUAL CAPS UNDER THE NEW MASTER PURCHASE AGREEMENT

The proposed annual caps under the New Master Purchase Agreement in respect of the costs on the purchases of the Office Supplies and Equipment payable by the Group to Daojiahui Technology Company are as follows:

From 1 April 2020 to 31	From 1 January 2021 to 31	From 1 January 2022 to
December 2020	December 2021	31 December 2022
RMB60,000,000	RMB69,000,000	RMB80,000,000

The above annual caps are determined by the parties after arm's length negotiations, taking into account of (i) the Group's historical costs on the purchases of the Office Supplies and Equipment through the Online Platform and the actual demand of the Office Supplies and Equipment; and (ii) an estimated increment of 15% applied to the annual caps for 2021 and 2022 to provide buffer for the increase in transaction amount due to, among other things, inflation, possible business expansion and equipment upgrade and replacement from time to time.

REASONS FOR AND BENEFITS OF ENTERING INTO THE NEW MASTER PURCHASE AGREEMENT

As the Online Platform where the Group purchased the Office Supplies and Equipment pursuant to the Original Agreement has no longer been operated by China Merchants Property, the Company determined to enter into the New Master Purchase Agreement with the current operator, Daojiahui Technology Company. The New Master Purchase Agreement continues to provide benefit of deferred settlement of up to 50 days and allows the Group to source its Office Supplies and Equipment through the Online Platform at market price and terms, contributing towards the Group's efforts in cost control and improving efficiency.

In view of the above, the Directors (including the independent non-executive Directors) consider that the terms of the New Master Purchase Agreement are fair and reasonable and on normal commercial terms, and the transactions contemplated thereunder (including the proposed annual caps) are in the ordinary and usual course of business of the Group and in the interests of the shareholders of the Company as a whole.

INFORMATION OF THE PARTIES

The Group is a leading integrated logistics services provider and integrator in the PRC, and its principal businesses include forwarding and related business, logistics business and e-commerce business.

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Daojiahui Technology Company is a company incorporated in the PRC with limited liability and a wholly-owned subsidiary of China Merchants Property Operation, which is owned as to 51.16% by CMG, as at the date of this announcement. Daojiahui Technology Company is principally engaged in centralised procurement of office supplies, corporate welfare and office services and so on. CMG is the ultimate controlling shareholder of the Company, and a state wholly-owned enterprise established under the laws of the PRC under direct control of the State-owned Assets Supervision and Administration Commission of the State Council of the PRC. CMG is a large-scale conglomerate with diversified businesses. At present, CMG mainly focuses on three core industries: comprehensive transportation, featured finance, holistic development and operation of residential communities and industrial parks. It has also been engaging in the transformation from these three primary industries to the three platforms of industrial management, financial services, and investment and capital operation.

IMPLICATIONS UNDER THE LISTING RULES

As at the date of this announcement, Daojiahui Technology Company is a wholly-owned subsidiary of China Merchants Property Operation, which is owned as to 51.16% by CMG. As CMG is the ultimate controlling shareholder of the Company holding in aggregate approximately 57.61% of the total issued share capital of the Company as at the date of this announcement, Daojiahui Technology Company is a connected person of the Company and the transactions contemplated under the New Master Purchase Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As the highest applicable percentage ratios (as defined under the Listing Rules) in respect of the highest annual cap for the transactions contemplated under the New Master Purchase Agreement is more than 0.1% but less than 5%, such transactions are subject to the reporting, announcement and annual review requirements but exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

None of the Directors had any material interest in the New Master Purchase Agreement, and therefore they are not required under the Listing Rules to abstain from voting on the relevant Board resolution. Nonetheless, as Mr. Song Dexing, Mr. Su Jian, Mr. Xiong Xianliang and Mr. Jiang Jian, being the directors of the Company, are concurrently holding positions in CMG, they have abstained from voting at the relevant Board resolution in accordance with the relevant PRC laws and regulations.

DEFINITIONS

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

"A Share(s)"	the domestic share(s) of the Company with nominal
	value of RMB1.00 each, which are listed on the
	Shanghai Stock Exchange and traded in RMB
"Board"	the board of directors of the Company
"China Merchants Property"	China Merchants Property Management Co., Ltd.*
	( 深 圳 招 商 物 業 管 理 有 限 公 司 ),	a company
	incorporated in the PRC with limited liability and a
	wholly-owned subsidiary of China	Merchants
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"China Merchants Property Operation"

"CMG"

"Company"

Property Operation as at the date of this announcement

China Merchants Property Operation & Service Co., Ltd.* (招商積餘產業運營服務股份有限公司), a joint stock limited company incorporated in the PRC with limited liability, whose A shares are listed on the Shenzhen Stock Exchange (stock code: 001914.SZ)

China Merchants Group Limited* (招商局集團有限 公 司 ), the ultimate controlling shareholder of the Company, and a state wholly-owned enterprise established under the laws of the PRC under direct control of the State-owned Assets Supervision and Administration Commission of the State Council of the PRC

Sinotrans Limited (中國外運股份有限公司), a joint stock limited company incorporated in the PRC with limited liability, whose H Shares are listed on the Hong Kong Stock Exchange and whose A Shares are listed on the Shanghai Stock Exchange

"connected person"	has the meaning ascribed to it under the Listing
	Rules
"controlling shareholder"	has the meaning ascribed to it under the Listing Rules
"Daojiahui Technology Company"	China Merchants (Shenzhen) Daojiahui Technology
	Co., Ltd.*( 深 圳 招 商 到 家 匯 科 技 有 限 公 司 ), a
	company incorporated in the PRC with limited
	liability and a wholly-owned subsidiary of China
	Merchants Property Operation as at the date of this
	announcement
"Director(s)"	director(s) of the Company
"Group"	the Company and its subsidiaries
"Hong Kong"	the Hong Kong Special Administrative Region of
	the PRC
"Hong Kong Stock Exchange"	The Stock Exchange of Hong Kong Limited
"H Share(s)"	overseas listed foreign invested share(s) of
	RMB1.00 each in the share capital of the Company,
	which are listed on the Hong Kong Stock Exchange
	and traded in Hong Kong dollars
"Independent Third Parties"	parties which are, to the best of the Directors'
	knowledge, information and belief having made all
	reasonable enquiries, independent of the Company
	and its connected persons

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"Listing Rules"	the Rules Governing the Listing of Securities on The
	Stock Exchange of Hong Kong Limited
"New Master Purchase Agreement"	the agreement dated 27 August 2020 entered into
	between the Company and Daojiahui Technology
	Company in relation to the purchase and supply of
	Office Supplies and Equipment through the Online
	Platform
"Office Supplies and Equipment"	the general office supplies and equipment which may
	be purchased by the Group from time to time,
	including but not limited to paper and pen, computers,
	printers and printing supplies etc.
"Online Platform"	an online shopping platform "招商到家滙" used to
	be operated by China Merchants Property and now by
	Daojiahui Technology Company
"Original Agreement"	the agreement dated 29 October 2018 entered into
	between the Company and China Merchants Property
	in relation to the purchase and supply of Office
	Supplies and Equipment through the Online Platform
"PRC"	the People's Republic of China, which for the
	purpose of this announcement, excludes Hong Kong,
	the Macau Special Administrative Region and Taiwan
"RMB"	Renminbi, the lawful currency of the PRC
"Share(s)"	H Share(s) and A Share(s)
"Shareholder(s)"	the shareholder(s) of the Company
"%"	per cent
* for identification purpose only
	By order of the Board
	Sinotrans Limited
	Li Shichu
	Company Secretary
Beijing, 27 August 2020

As at the date of this announcement, the board of directors of the Company comprises Li Guanpeng (Chairman), Song Dexing (Vice Chairman), Song Rong (executive director), Su Jian (non-executive director), Xiong Xianliang (non-executive director), Jiang Jian (non-executive director), Jerry Hsu (non-executive director), and four independent non-executive directors, namely Wang Taiwen, Meng Yan, Song Haiqing and Li Qian.

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