(1) Continuing connected transactions revision of annual caps of the master gas supply connection agreement and (2) re-elections of the retiring directors

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 transferred all your shares in Binhai Investment Company Limited, you should at once hand this circular, together with the enclosed proxy form, to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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.

This circular, for which the directors of the issuer collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the issuer. 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.

(Incorporated in Bermuda with limited liability)

(Stock code: 2886)

1. CONTINUING CONNECTED TRANSACTIONS REVISION OF ANNUAL CAPS OF THE

MASTER GAS SUPPLY CONNECTION AGREEMENT

AND

(2) RE-ELECTIONS OF THE RETIRING DIRECTORS

Independent financial adviser to the Independent Board Committee and

the Independent Shareholders

ALTUS CAPITAL LIMITED

A letter from the Board is set out on pages 5 to 13 of this circular. A letter from the Independent Board Committee containing its advice and recommendation to the Independent Shareholders is set out on pages 14 to 15 of this circular. A letter from Altus Capital, the independent financial adviser to the Independent Board Committee and the Independent Shareholders, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 16 to 28 of this circular.

A notice convening the SGM to be held at Suites 3205-07, 32/F, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong at 2:30 p.m. on 24 October 2019 is set out on pages 36 to 37 of this circular. Whether or not you are able to attend the meeting in person, you are recommended to complete the enclosed proxy form in accordance with the instructions printed thereon and return it to the Company's branch share registrar in Hong Kong, Hong Kong Registrars Limited, at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of such meeting or any adjournment thereof. Completion and return of the proxy form shall not preclude you from subsequently attending and voting in person at the meeting or any adjournment thereof should you so wish.

8 October 2019

- i -

DEFINITIONS

Unless the context otherwise requires, the following terms in this circular shall have the meanings set out below:

- 1 -

"Independent Shareholders" the Shareholders who or which are not prohibited or required to abstain from voting under the Listing Rules to approve the relevant transaction at a general meeting of the Company

- 2 -

- 3 -

• For identification purposes only

- 4 -

LETTER FROM THE BOARD

(Incorporated in Bermuda with limited liability)

(Stock code: 2886)

8 October 2019

To the Shareholders

Dear Sir or Madam,

1. CONTINUING CONNECTED TRANSACTIONS REVISION OF ANNUAL CAPS OF THE

MASTER GAS SUPPLY CONNECTION AGREEMENT

AND

(2) RE-ELECTIONS OF RETIRING DIRECTORS

INTRODUCTION

Reference is made to the announcement of the Company dated 19 November 2018 and the circular of the Company dated 14 January 2019 in relation to the Company entering into the Master Gas Supply Agreement and the Master Gas Supply Connection Agreement with TEDA, constituting continuing connected transactions of the Company.

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LETTER FROM THE BOARD

The Master Gas Supply Connection Agreement and the Existing Annual Caps were approved by the Independent Shareholders. As disclosed in the announcement of the Company dated 16 September 2019, the Company expects that the Existing Annual Caps will not be sufficient for the transaction amounts to be incurred for the provision of Gas Supply Connection Services by the Group to TEDA Group under the Master Gas Supply Connection Agreement due to unanticipated greater demand for such services of the Group. Accordingly, the Existing Annual Caps are revised to the Revised Annual Caps to accommodate a greater demand for the Gas Supply Connection Services.

Reference is also made to the announcement of the Company dated 27 September 2019 in relation to the appointment of Ms. Cao Hong Mei and Ms. Peng Bo as non-executive Directors with effect from 27 September 2019.

The main purposes of this circular are to provide you with:

1. further details of the Revised Annual Caps;
2. information regarding the re-elections of retiring Directors;
3. the advice and recommendations of the Independent Board Committee to the Independent Shareholders in relation to the transactions under the Master Gas Supply Connection Agreement and the Revised Annual Caps;
4. the advice of Altus Capital to the Independent Board Committee and the Independent Shareholders in relation to the transactions under the Master Gas Supply Connection Agreement and the Revised Annual Caps; and
5. the notice convening the SGM, at which ordinary resolutions will be proposed to consider and, if thought fit, to approve the Revised Annual Caps and the re-elections of retiring Directors.

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LETTER FROM THE BOARD

THE MASTER GAS SUPPLY CONNECTION AGREEMENT

In November 2018, the Company entered into the Master Gas Supply Connection Agreement with TEDA with particulars as follows:-

Date

19 November 2018

The parties

1. TEDA
2. the Company

Nature of the transactions

The Group will provide Gas Supply Connection Services to TEDA Group on a project basis pursuant to the Gas Connection Facilities Construction Engagement Agreements to be entered into from time to time.

Term

1 January 2019 to 31 December 2021

Condition precedent to the taking effect of the Master Gas Supply Connection Agreement

The Master Gas Supply Connection Agreement shall take effect after approval by the Independent Shareholders as may be required under the Listing Rules.

Consideration

The consideration for the Gas Supply Connection Services to be provided by the Group shall be the amount as stated in each of the Gas Connection Facilities Construction Engagement Agreements to be entered into from time to time, for the specific Gas Supply Connection Services to be provided thereunder.

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LETTER FROM THE BOARD

With reference to the above, the Gas Connection Facilities Construction Engagement Agreements to be entered into by subsidiaries of the Group with TEDA Group shall be on normal commercial terms that are fair and reasonable, and shall be on terms no less favourable to the Group than those available to the Group for the provision of comparable services to independent third parties.

Annual caps

The historical transaction amounts of Gas Supply Connection Services provided by the Group to TEDA Group for the three years ended 31 December 2016, 2017 and 2018, and for the period from 1 January 2019 to the Latest Practicable Date, are as follows:

Set out below are the Existing Annual Caps and the Revised Annual Caps for the three years ending 31 December 2019, 2020 and 2021:

Basis of the Revised Annual Caps

The Revised Annual Caps are determined with reference to the following factors: (i) the transaction amounts under the Gas Connection Facilities Construction Engagement Agreements entered into between the subsidiaries of the Group and TEDA Group, which are yet to be carried out in full; and (ii) estimates on the demands for Gas Supply Connection Services based on information obtained from negotiations with TEDA Group, including the estimated areas of land requiring Gas Supply Connection Services for business developments and the progress of different projects.

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LETTER FROM THE BOARD

Reasons for and benefits of entering into the Master Gas Supply Connection Agreement

The Company believes that the entering into of the Master Gas Supply Connection Agreement with TEDA is beneficial to all parties in responding positively to the 13th Five-Year call for energy conservation and emission reduction, adoption of clean energy, practicing green responsibility, active participation in environmental protection and smog management, and will also conducive to increasing the revenue and profit of the Group.

The PRC government implemented property market adjustment measures that effectively compressed the overgrowth of property price. Being the only unrestricted purchase area for residential properties in Tianjin, the Binhai New Area has attracted more attention from real estate developers and investors. The Revised Annual Caps are determined as a result of the impacts of the implementation of new real estate projects and rapid development in the Binhai New Area of Tianjin.

The Board considers that the Master Gas Supply Connection Agreement and the transactions contemplated thereunder (including the Revised Annual Caps) are fair and reasonable and in the interest of the Shareholders as a whole.

No Director has a material interest in the transactions contemplated under the Master Gas Supply Connection Agreement. For good corporate governance practices, Mr. Zhang Bing Jun and Mr. Wang Gang, being Directors who also held executive positions in TEDA, abstained from voting at the resolutions of the Board approving the Master Gas Supply Connection Agreement to avoid any potential conflict of interest.

GENERAL INFORMATION

The Group is principally engaged in the construction of gas pipeline networks, gas construction and installation service, sales of piped natural gas, pipeline transportation and bottled natural gas sales.

TEDA is a state-owned enterprise established in the PRC and a controlling shareholder of the Company. The principal business areas of TEDA are regional development, public utilities, finance and modern services.

LISTING RULES IMPLICATIONS

TEDA is the ultimate controlling shareholder of the Company, holding 706,818,659 Shares (representing approximately 60.19% of the total number of Shares in issue) through its wholly-owned subsidiary, and is thus a connected person of the Company under the Listing

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LETTER FROM THE BOARD

Rules. Subsidiaries and associates of TEDA are also regarded as connected persons of the Company. Therefore, transactions under the Master Gas Supply Connection Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

While the Master Gas Supply Connection Agreement and the Existing Annual Caps had been approved by the Independent Shareholders at the special general meeting of the Company held on 30 January 2019, the Company is required under Rule 14A.54 of the Listing Rules to re-comply with the announcement and shareholders' approval requirements before making changes to the Existing Annual Caps.

As at least one of the applicable percentage ratios in respect of the Revised Annual Caps in aggregation with the Master Gas Supply Annual Caps exceed 5%, the transactions under the Master Gas Supply Connection Agreement and the Revised Annual Caps are subject to the reporting, announcement, annual review and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

An Independent Board Committee, comprising all the independent non-executive Directors, has been established to advise the Independent Shareholders in relation to the Master Gas Supply Connection Agreement and the transactions thereunder (including the Revised Annual Caps). Your attention is drawn to the advice from and the recommendation of the Independent Board Committee set out in its letter dated 8 October 2019 on pages 14 to 15 of this circular.

Altus Capital has been appointed as the independent financial adviser to the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Master Gas Supply Connection Agreement and the transactions thereunder (including the Revised Annual Caps). Your attention is also drawn to the letter from Altus Capital to the Independent Board Committee and the Independent Shareholders dated 8 October 2019 on pages 16 to 28 of this circular.

RE-ELECTIONS OF RETIRING DIRECTORS

In accordance with Bye-law 86(2) of the Company, Ms. Cao Hong Mei and Ms. Peng Bo, who were appointed as non-executive Directors with effect from 27 September 2019 to fill casual vacancies on the Board, shall hold office until the next following general meeting of the Company and, being eligible, have offered themselves for re-elections at the SGM.

Brief biographical details of Ms. Cao Hong Mei and Ms. Peng Bo are set out in Appendix I to this circular.

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LETTER FROM THE BOARD

RECOMMENDATION OF THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee, having taken into account the advice of Altus Capital, considers that the terms of the Master Gas Supply Connection Agreement and the transactions thereunder (including the Revised Annual Caps) are fair and reasonable, and that the entering into of the Master Gas Supply Connection Agreement is on normal commercial terms or better and in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends that all Independent Shareholders should vote in favour of the ordinary resolution to be proposed at the SGM to approve the Revised Annual Caps.

RECOMMENDATION OF THE BOARD

Taking into account the letter from the Independent Board Committee and all other factors as stated above as a whole, the Board recommends the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Revised Annual Caps.

In addition, the Board believes that the proposed re-elections of Ms. Cao Hong Mei and Ms. Peng Bo as Directors is in the best interests of the Company as well as the Shareholders. Accordingly, the Board recommends that all Shareholders should vote in favour of the resolutions to be proposed at the SGM to approve the re-elections of retiring Directors.

ADDITIONAL INFORMATION

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

• For identification purposes only

By Order of the Board

BINHAI INVESTMENT COMPANY LIMITED

GAO Liang

Executive Director

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

(Incorporated in Bermuda with limited liability)

(Stock code: 2886)

8 October 2019

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

REVISION OF ANNUAL CAPS OF THE

MASTER GAS SUPPLY CONNECTION AGREEMENT

We have been appointed as members of the Independent Board Committee to advise you as to whether, in our opinion, the terms of the Master Gas Supply Connection Agreement and the transactions thereunder (including the Revised Annual Caps) are fair and reasonable.

Altus Capital has been appointed by the Company as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Master Gas Supply Connection Agreement and the transactions thereunder (including the Revised Annual Caps).

Your attention is drawn to the "Letter from the Board" set out on pages 5 to 13 of the circular which contains, inter alia, information about the terms of the Master Gas Supply Connection Agreement and the transactions thereunder (including the Revised Annual Caps), and the "Letter from Altus Capital" set out on pages 16 to 28 of the circular which contains its advice in respect of the Master Gas Supply Connection Agreement and the transactions thereunder (including the Revised Annual Caps) together with the principal factors taken into consideration in arriving at such.

- 14 -

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having considered the terms of the Master Gas Supply Connection Agreement and having taken into account the factors and reasons considered by and the advice of Altus Capital, we consider that the entering into of the Master Gas Supply Connection Agreement and the transactions thereunder (including the Revised Annual Caps) is on normal commercial terms or better and in the ordinary and usual course of business of the Group. We also consider that the Master Gas Supply Connection Agreement and the Revised Annual Caps are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Revised Annual Caps.

Yours faithfully,

For and on behalf of the

Independent Board Committee

Independent Non-executive Directors

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LETTER FROM ALTUS CAPITAL

The following is the text of a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of revision of Annual Caps of the Master Gas Supply Connection Agreement contemplated thereunder, which has been prepared for the purposes of incorporation in this circular.

21 Wing Wo Street

Central

Hong Kong

8 October 2019

To the Independent Board Committee and the Independent Shareholders

Binhai Investment Company Limited

Suite 3205-07, 32/F,

Tower 2, Times Square,

1 Matheson Street, Causeway Bay

Hong Kong

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS

REVISION OF ANNUAL CAPS OF THE

MASTER GAS SUPPLY CONNECTION AGREEMENT

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Master Gas Supply Connection Agreement and the transactions thereunder (the "Transactions") (including the Revised Annual Caps), details of which are set out in the "Letter from the Board" contained in the circular of the Company dated 8 October 2019 (the "Circular). Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless the context requires otherwise.

We refer to the announcement of the Company dated 16 September 2019, among other things, that the Company entered into the Master Gas Supply Agreement and the Master Gas Supply Connection Agreement with TEDA, constituting continuing connected transactions of the Company. The Company expects that the Existing Annual Caps will

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LETTER FROM ALTUS CAPITAL

THE INDEPENDENT FINANCIAL ADVISER

As the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, our role is to give an independent opinion to the Independent Board Committee and the Independent Shareholders as to (i) whether the terms of the Master Gas Supply Connection Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) whether the Master Gas Supply Connection Agreement and the transactions contemplated thereunder will be conducted in the ordinary and usual course of business of the Group and are in the interests of the Company and the Shareholders as a whole; (iii) whether the Revised Annual Caps are fair and reasonable; and (iv) how the Independent Shareholders should vote in respect of the related resolution to be proposed at the SGM.

We have not acted as independent financial adviser in relation to any transactions of the Company in the last two years prior to the date of the Circular. Pursuant to Rule 13.84 of the Listing Rules, and given that remuneration for our engagement to opine on the Master Gas Supply Connection Agreement and the Revised Annual Caps contemplated thereunder is at market level and not conditional upon successful passing of the resolution to be proposed at the SGM, and that our engagement is on normal commercial terms, we are independent of and not associated with the Company, its controlling shareholder(s) or connected person(s).

BASIS OF OUR ADVICE

In formulating our opinion, we have reviewed, amongst others (i) the Master Gas Supply Connection Agreement; (ii) the annual report of the Company for the year ended 31 December 2018 (the "2018 Company Annual Report"); (iii) the interim report of the Company for the six months ended 30 June 2019; (iv) the Company's circular on the Master Gas Supply Agreement and the Master Gas Supply Connection Agreement dated 14 January 2019 (the "Previous Circular"); and (v) other information set out in the Circular.

We have also relied on the statements, information, opinions and representations contained or referred to in the Circular and/or provided to us by the Company, the Directors and the management of the Group (the "Management"). We have assumed that all the statements, information, opinions and representations for matters relating to the Group contained or referred to in the Circular and/or provided to us by the Company, the Directors and the Management were reasonably made after due and careful enquiry and were true, accurate and complete at the time they were made and continued to be so as at the date of the Circular.

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LETTER FROM ALTUS CAPITAL

In general, we note that the Group's financial performance has improved in the past years in tandem with the positive development of the natural gas industry. This in turn will increase the demand for natural gas and hence the Gas Supply Connection Services, which is in line with the increase in the total revenue recorded by the Group. The provision of Gas Supply Connection Services under the Master Gas Supply Connection Agreement belongs to one of the principal businesses of the Group. The Transactions are therefore conducted in the ordinary and usual course of business of the Group.

1.2. Information of TEDA Group

Principal business of TEDA Group

TEDA is a state-owned enterprise established in the PRC and a controlling shareholder of the Company. The principal business areas of TEDA Group are regional development, public utilities, finance and modern services. It is a large-scalestate-owned conglomerate and is one of the most significant enterprises in the construction of the Binhai New Area of Tianjin.

Prospects of TEDA Group

The Binhai New Area of Tianjin is a national strategic development region with a gross domestic product of approximately RMB665.4 billion in 2016. TEDA Group is the main developer of various functional zones within the Binhai New Area of Tianjin and has a large number of subsidiaries engaging in various industries in the Binhai New Area of Tianjin, such as regional development, steel making and property development. The Company being a subsidiary of TEDA, will benefit from TEDA Group's business development and market expansion in the strategic region of Binhai New Area of Tianjin. In particular, the Transactions will facilitate the Group's collaboration with its controlling shareholder, TEDA, which is conducive to promoting their complementary strengths in the industries, and the joint development of TEDA Group and the Group.

TEDA Group develops properties in the Binhai New Area of Tianjin, the gas supply connection projects of which are granted to the Group under the Master Gas Supply Connection Agreement. In addition, TEDA Group acts as the contractor of properties developed by other independent third parties in this area which gas supply connection works are also subcontracted to the Group under the Master Gas Supply Connection Agreement. Terms of the Gas

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LETTER FROM ALTUS CAPITAL

Connection Facilities Construction Engagement Agreements are negotiated on an arm's length basis as described in the Previous Circular and are similar to those with independent third parties. The Transactions are therefore on normal commercial terms or better.

2. THE ENTERING INTO OF THE MASTER GAS SUPPLY CONNECTION AGREEMENT

The Company has entered into the Master Gas Supply Connection Agreement since 19 November 2018. The Directors believe that heeding the 13th Five-Year Plan which calls for energy conservation and emission reduction, adoption of clean energy, practising green responsibility, active participation in environmental protection and smog management, the entering into of the Master Gas Supply Connection Agreement with TEDA is beneficial and conducive to increasing the revenue and profit of the Group. While the PRC government implemented property market adjustment measures that effectively suppressed the overgrowth of property price, the Binhai New Area is the only unrestricted purchase area for residential properties in Tianjin, which has attracted more attention from real estate developers and investors. Impacts of the implementation of new real estate projects and rapid development in the Binhai New Area of Tianjin are factors being considered when determining the Revised Annual Caps. We have reviewed the policy guidance issued by Tianjin Municipal People's Government and concurred with the view of the Management that such policy will enhance the attractiveness of the Binahi New Area. This will in turn enhance the business potential of the Group.

The aforementioned benefits can be reflected in the increase in demand for Gas Supply Connection Services since the entering into of the Master Gas Supply Connection Agreement in November 2019 which necessitated the Directors to consider increasing the Existing Annual Caps.

The Directors (excluding the independent non-executive Directors who will render their views after considering the advice to be given by the independent financial adviser in respect of the Master Gas Supply Connection Agreement and the Revised Annual Caps) consider that the Master Gas Supply Connection Agreement and the transactions contemplated thereunder (including the Revised Annual Caps) are fair and reasonable and in the interests of the Shareholders as a whole.

Even though the Existing Annual Caps are revised to the Revised Annual Caps in respect of provision of Gas Supply Connection Services under the Master Gas Supply Connection Agreement, all the terms and conditions of the Master Gas Supply Connection Agreement remain unchanged, in full force and effect.

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LETTER FROM ALTUS CAPITAL

Based on our discussion with the Management, in view of the increasing demand for the Gas Supply Connection Services for the three years ending 31 December 2021, the Management considers it is necessary to increase the Existing Annual Caps despite a relatively low utilisation rate of 32.4% up to the date hereof. We understand from the Management that the Gas Supply Connection Services to TEDA Group during the first three quarters had been affected by delays in working progress of certain planned projects mentioned in the Previous Circular as the Company had focused on certain other urgent projects from independent third parties. The Company plans to re-focus on the provision of Gas Supply Connection Services under the Master Gas Supply Connection Agreement from the last quarter of 2019 onwards.

The Company expects to secure at least 5 additional projects for the year 2019 on top of the projects mentioned in the Previous Circular. In particular, these proposed projects are expected to gain pace in the next two to three months. Moreover, the Company estimates that the Group will be able to secure over 16 new projects for the years 2020 and 2021 on top of those estimated when determining the Existing Annual Caps.

Based on the aforementioned projects that are expected to be secured and commence work within the next two to three months, the demand for the Gas Supply Connection Service is expected to increase for the three years ending 31 December 2021, and hence necessitating the increase of transaction amounts as indicated in the Revised Annual Caps.

3.2. Basis for determining the Revised Annual Caps

We note that the Company uses the following factors to determine the Revised Annual Caps:

1. transaction amounts under the Gas Connection Facilities Construction Engagement Agreements entered into between the subsidiaries of the Group and TEDA Group, which are yet to be carried out in full, with the amount to be recognised for the three years ending 31 December 2021 being approximately RMB6.8 million in aggregate; and

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LETTER FROM ALTUS CAPITAL

1. estimates on the demands for Gas Supply Connection Services.
2. 1. estimated residential/non-residential units and estimated areas of land
      According to the Management, estimates on demands for Gas Supply Connection Services are based on information of secured projects and projects under negotiations with TEDA Group (being approximately RMB22,690,000, RMB30,302,000 and RMB27,776,000 for 2019, 2020 and 2021 respectively, representing 100% of the Revised Annual Caps). Such estimated demand is based on: -
   2. 1. the estimated areas of land requiring Gas Supply Connection Services for construction work in the common areas (being 601,414m2, 832,323m2 and 688,794m2 for 2019, 2020 and 2021 respectively which are consistent with market practice);
      2. the estimated number of residential units requiring Gas Supply Connection Services (being approximately 5,503, 6,395 and 6,067 for 2019, 2020 and 2021 respectively);
      3. estimated non-residential units requiring Gas Supply Connection Services (being 6, 3, and 4 for 2019, 2020, 2021 respectively); and
      4. the expected schedule/progress of relevant construction projects.

The abovementioned estimated number of residential units and non-residential units are based on the estimated areas of land and other information obtained during negotiations with TEDA Group and relevant property developers. Such methods of estimation is consistent with market practice. The aggregate size of the areas of land and the number of residential and non-residential units requiring Gas Supply Connection Services are directly proportional to the amount of fees for such services.

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LETTER FROM ALTUS CAPITAL

The Company uses estimated areas of land, and hence the number of residential and non-residential units, requiring Gas Supply Connection Services as a basis of determining the Revised Annual Caps. Such calculation basis is consistent with those that had been recommended by the Pricing Department of the Tianjin Municipal Government up till 1 April 2018. As no new guidance has been issued, the Directors are of the view, and we concur, that this measuring basis remains to be the most appropriate methods and the Company has hence continued to use such standard to estimate the Revised Annual Caps, which is consistent with market practice;

1. the cost components of certain construction projects
2. 1. 
      When determining the fee of these construction projects, the Management would take into account the cost components including (i) the daily maximum gas consumption volume by TEDA Group requiring the Gas Supply Connection Services, which will be proportional to the project costs directly; (ii) amount of construction work to be carried out, including the fees for sub-contracting the design, construction and supervision work, purchasing of materials, instruments and equipment for the construction and the maintenance of the facilities constructed; and
   2. the estimated profit margin for such projects based on the internal policy of the Company and historical profit margin subject to discussions with TEDA Group and relevant property developers.

The above level of profit margin is consistent with the Company's internal policy where profit margin of each project shall not be lower than a target level. We noted from the Management that the historical profit margin for Gas Supply Connection Services was between 60% and 78% during the years 2016 to 2018 which has been above such target level. Therefore, the Management considers, and we concur, that using a profit margin based on the internal policy of the Company and with reference to historical profit margin for calculation of the Revised Annual Caps is reasonable.

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LETTER FROM ALTUS CAPITAL

We have reviewed over 20 relevant sample documents in total relating to each of the above basis. Regarding the aforementioned transaction amounts under the Gas Connection Facilities Construction Engagement Agreements, we have reviewed documents of projects with the highest transaction amount for each of the three years ending 31 December 2021, including the contracts and summary of working progress. For estimates on the demand for Gas Supply Connection Services, we have reviewed supporting documents of at least five projects for each basis mentioned above, which covered top three projects with the highest estimated residential/ non-residential units, estimated areas of land and the cost components of construction projects for the three years ending 31 December 2021. Such supporting documents include (a) signed contracts and a summary of working progress of sample projects secured by the Group from TEDA Group; and (b) official certificates of sample construction projects granted to TEDA Group which further require Gas Supply Connection Services and the respective project schedules. The samples covered more than 50% of the aggregated transaction amount to be incurred for the three years ending 31 December 2021. The samples are found to be consistent with the aforementioned basis. Therefore, we are of the view that the selection basis of the sample projects and the respective sample size are reasonable.

For ease of reference, the table below sets out the comparison of the number of projects, estimated residential units, estimated non-residential units and estimated areas of land used to calculate the Existing Annual Caps and the Revised Annual Caps.

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LETTER FROM ALTUS CAPITAL

As shown in the table above, there is a significant increase in the number of projects, estimated number of residential and non-residential units and estimated areas of land requiring Gas Supply Connection Services for 2019, 2020 and 2021 respectively. These underpin a reasonable basis for the Revised Annual Caps.

In summary, considering (i) favourable policies and ancillary measures on the "13th Five-Year Plan" calling for green energy, which includes natural gas;

1. rapid development in the Binhai New Area of Tianjin; (iii) the transaction amounts under the Gas Connection Facilities Construction Engagement Agreements which are not yet to be carried out in full; and (iv) increase in estimates on the demands for Gas Supply Connection Services as mentioned above, we are of the view that the Revised Annual Caps for the Transactions are fair and reasonable.

RECOMMENDATION

Having considered the above principal factors, we are of the view that (i) the terms of the Master Gas Supply Connection Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) the Master Gas Supply Connection Agreement and the transactions contemplated thereunder will be conducted in the ordinary and usual course of business of the Group and are in the interests of the Company and the Shareholders as a whole; and (iii) the Revised Annual Caps are fair and reasonable.

Accordingly, we would recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolution to be proposed at the SGM to approve the Revised Annual Caps.

Yours faithfully,

For and on behalf of

Altus Capital Limited

Chang Sean Pey

Executive Director

- 27 -

LETTER FROM ALTUS CAPITAL

Mr. Chang Sean Pey ("Mr. Chang") is a Responsible Officer of Altus Capital Limited licensed to carry on Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO and permitted to undertake work as a sponsor. He is also a Responsible Officer of Altus Investments Limited licensed to carry on Type 1 (dealing in securities) regulated activity under the SFO. Mr. Chang has over 20 years of experience in banking, corporate finance advisory and investment management. In particular, he has participated in sponsorship work for initial public offerings and acted as financial adviser or independent financial adviser in various corporate finance advisory transactions.

- 28 -

APPENDIX I DETAILS OF RETIRING DIRECTORS PROPOSED FOR RE-ELECTIONS

The following are the particulars of the retiring Directors proposed to be re-elected at the SGM:

Ms. Cao Hong Mei ("Ms. Cao"), aged 49, graduated from Tianjin Chengjian University with major in thermal and environmental engineering (city gas) in 1992. She completed a master degree at Tianjin Chengjian University with major in architecture and civil engineering in 1992, and completed a master degree at the Business School of Nankai University with major in business administration in 2014. She served as a coke making staff at Tianjin No. 2 Coal Gasification Plant*（天津第二煤制氣廠）and a staff at Tianjin's Development Zone Gas Company*（天津開發區燃氣公司）. She served as a department head, chief engineer, general manager and director at Tianjin Teda Gas Co., Ltd.*（天 津泰達燃氣有限責任公司）("TEDA Gas"). Currently, she serves as a director of Binhai Investment (Tianjin) Company Limited*（濱海投資( 天津) 有限公司）(a wholly-owned subsidiary of the Company) and the manager in the environmental department of TEDA.

Ms. Peng Bo ("Ms. Peng"), aged 48, is an International Certified Public Accountant, Tax Accountant and Intermediate Accountant. She graduated from Tianjin Tanggu Workers' University*（天津塘沽職工大學）with major in financial accounting in 1998. She served as the manager in the accounting and finance department of TEDA Gas and the deputy head of assets and capital verification task force at TEDA. She served as a director of TEDA Gas. Currently, she serves as the manager in the asset management department of TEDA and a director of Tianjin Binhai Teda Logistics (Group) Corporation Limited*（天 津濱海泰達物流集團股份有限公司）listed on GEM of the Stock Exchange (Stock code: 8348) and Tianjin Jinbin Development Co., Ltd.*（天津津濱發展股份有限公司）listed on the Shenzhen Stock Exchange (Stock code: 000897).

Save as disclosed above, Ms. Cao and Ms. Peng have not held any other positions with the Group nor hold any directorships in the last three years in other public companies the securities of which are listed on any securities market in Hong Kong or overseas, and are not connected with any other Directors, senior management or substantial or controlling shareholders of the Company.

As at the Latest Practicable Date, Ms. Cao and Ms. Peng did not have any interest in the Shares of the Company within the meaning of Part XV of the SFO.

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APPENDIX I DETAILS OF RETIRING DIRECTORS PROPOSED FOR RE-ELECTIONS

Pursuant to the service contracts entered into between the Company and each of Ms. Cao and Ms. Peng, Ms. Cao and Ms. Peng were appointed for a term of three years commencing on 27 September 2019 respectively, subject to retirement by rotation and reelection at the annual general meeting of the Company in accordance with the requirement of the Bye-laws of the Company. Ms. Cao and Ms. Peng are both entitled to a director's fee of HK$200,000 per year, which has been reviewed by the remuneration committee of the Company and determined by the Board with reference to market rates, their qualifications and experience.

Save as disclosed above, Ms. Cao and Ms. Peng have confirmed that there are no other matters that need to be brought to the attention of the Shareholders in connection with their re-elections and there is no information to be disclosed pursuant to Rules 13.51(2)(h) to (v) of the Listing Rules.

• For identification purposes only

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1. RESPONSIBILITY STATEMENT
   This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliances 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. INTERESTS AND SHORT POSITIONS OF DIRECTORS AND THE CHIEF EXECUTIVES IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY
   As at the Latest Practicable Date, the interests or short positions of the Directors and the chief executives of the Company in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO), which were required to be (i) notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), or (ii) entered in the register kept by the Company pursuant to section 352 of the SFO, or (iii) notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules are as follows:
3. 1. Long position in Shares

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1. Directors' interest in share options granted by the Company

Note: Pursuant to the share option scheme of the Company adopted on 20 August 2010 and upon the share consolidation taking effect on 14 May 2015, all the share options stated above were granted on 27 September 2010 and are exercisable at HK$5.6 per Share at any time between 27 September 2010 and 26 September 2020.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and the chief executives of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporation(s) (within the meaning of Part XV of the SFO) which were required to be (i) notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interest or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) entered in the register kept by the Company pursuant to section 352 of the SFO; or (iii) notified to the Company and the Stock Exchange pursuant to Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules.

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As at the Latest Practicable Date, so far as was known to the Directors, the following Directors were also directors or employees of a company which has an interest or short position in the Shares or 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:

1. COMPETING INTERESTS
   As at the Latest Practicable Date, in so far as the Directors are aware, none of the Directors or any of their respective close associates had an interest in a business that competes or is likely to compete, either directly or indirectly with the business of the Group.
2. DIRECTORS' SERVICE CONTRACTS
   As at the Latest Practicable Date, none of the Directors had entered, or proposed to enter, into a service contract with any member of the Group which did not expire or was not determinable by the relevant member of the Group within one year without payment of any compensation (other than statutory compensation).
3. MATERIAL ADVERSE CHANGE
   As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2018, being the date to which the latest published audited accounts of the Group were made up.

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1. DIRECTORS' INTERESTS IN ASSETS AND/OR CONTRACTS AND OTHER INTEREST
   As at the Latest Practicable Date, none of the Directors had 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 Company were made up, acquired or disposed of by or leased to, or are proposed to be acquired or disposed of by or leased to, any member of the Group.
   As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement subsisting which is significant in relation to the business of the Group.
2. EXPERT
   The following is the qualification of the expert who has given opinion or advice which is contained in this circular:

Altus Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and references to its name in the form and context in which they respectively appear.

The letter given by Altus Capital is given as of the date of this circular for incorporation herein.

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

As at the Latest Practicable Date, Altus Capital did not have any direct or indirect interest in any assets which have been, since 31 December 2018 (being the date to which the latest published audited accounts of the Company were made up), acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired or disposed of by or leased to any member of the Group.

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1. GENERAL
   In case of inconsistency, the English text of this circular and the accompanying form of proxy shall prevail over the Chinese text.
2. DOCUMENTS AVAILABLE FOR INSPECTION
   Copies of the following documents are available for inspection at the head office of the Company at Suites 3205-07, 32/F., Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong during normal business hours up to and including the date of the SGM (and any adjournment thereof):
3. 1. The Master Gas Supply Agreement;
   2. The Master Gas Supply Connection Agreement;
   3. Gas Connection Facilities Construction Engagement Agreement;
   4. The letter from the Independent Board Committee, the text of which is set out on pages 14 to 15 of this circular;
   5. The letter from Altus Capital, the text of which is set out on pages 16 to 28 of this circular; and
   6. The consent letter of Altus Capital referred to in the section headed "Expert" of this appendix.

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NOTICE OF THE SPECIAL GENERAL MEETING

Notes:

1. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies (if a member who is the holder of two or more ordinary shares of the Company) to attend and vote in his stead. A proxy needs not be a member of the Company.
2. Where there are joint holders of any ordinary share any one of such joint holder may vote, either in person or by proxy, in respect of such ordinary share as if he were solely entitled thereto, but if more than one of such joint holders be present at any meeting the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of members in respect of the joint holding.
3. To be valid, the form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such authority, must be deposited at the Company's branch share registrar in Hong Kong, Hong Kong Registrars Limited, at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof.
4. For determining the entitlement to attend and vote at the meeting, the register of members of the Company will be closed from 21 October 2019 to 24 October 2019, both days inclusive, during which period no transfer of ordinary shares will be registered. In order to be eligible to attend and vote at the meeting, all completed transfer documents, accompanied by the relevant share certificates, must be lodged with the Company's branch share registrar in Hong Kong, Hong Kong Registrars Limited, at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Friday, 18 October 2019.
5. As at the date hereof, the Board comprises two executive Directors, namely, Mr. Zhang Bing Jun and Mr. Gao Liang, four non-executive Directors, namely, Mr. Wang Gang, Mr. Yu Ke Xiang, Ms. Cao Hong Mei and Ms. Peng Bo, and three independent non-executive Directors, namely, Mr. Ip Shing Hing, J.P., Mr. Lau Siu Ki, Kevin and Professor Japhet Sebastian Law.

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