Announcement change in use of proceeds

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

(Stock Code: 1786)

ANNOUNCEMENT

CHANGE IN USE OF PROCEEDS

Reference is made to the prospectus of CRCC High-Tech Equipment Corporation Limited (the "Company" and together with its subsidiaries, the "Group") dated 3 December 2015 (the "Prospectus") in relation to the listing of the Company's shares on the Main Board of The Stock Exchange of Hong Kong Limited, the announcement dated 28 December 2016 (the "Announcement") in relation to the change in use of proceeds, and the annual report of the Group for the year ended 31 December 2018 in relation to the updates regarding use of proceeds. Unless otherwise defined, capitalised terms used in this announcement shall have the same meanings as defined in the Prospectus.

CHANGE IN USE OF PROCEEDS

The net proceeds from the Global Offering, after deducting the underwriting commissions and expenses payable by the Company in relation to the Global Offering, were approximately RMB2.27 billion. As disclosed in the Announcement, the net proceeds from the Global Offering were originally intended to be applied by the Company for the following purposes:

1. construction of "International Technology Cooperation Center" project: approximately 40% of the net proceeds from the Global Offering will be used for the construction of our "International Technology Cooperation Center" project, including acquisition of land, construction of infrastructure and purchase of equipment;
2. development of regional business network platform: approximately 10% of the net proceeds from the Global Offering will be used for upgrading our business network by developing our sales offices into 4S stores that integrate functions of sales, service, spare parts and survey, so as to provide comprehensive customer services and systemic solutions to our large railway track maintenance machine customers;

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1. general domestic and overseas mergers and acquisitions: approximately 20% of the net proceeds from the Global Offering will be used for general domestic and overseas acquisitions that, among others, relate to the large railway track maintenance machinery industry, and will enable us to strengthen and complement our core value chain; and
2. working capital: not more than approximately 30% of the net proceeds from the Global Offering will be used to supplement working capital.

For reasons set out in the paragraph headed "Reasons for and Benefits of the Change in Use of Proceeds" of this announcement, the board of directors of the Company (the "Board") has resolved to change the use of net proceeds from the Global Offering as follows: approximately 14.54% of the net proceeds from the Global Offering in an amount of approximately RMB0.33 billion, which were originally allocated for general domestic and overseas mergers and acquisitions as set out in item (c) above, will be re-allocated to supplement the working capital of the Company. The use of net proceeds from the Global Offering in the further revised manner is set out as follows:

Note: any discrepancies in this table between totals and sums of amounts listed herein are due to rounding .

Save for the aforesaid changes, there are no other changes in the use of the net proceeds from the Global Offering.

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REASONS FOR AND BENEFITS OF THE CHANGE IN USE OF PROCEEDS

In order to strengthen the use efficiency of proceeds, reduce finance cost and protect the interest of investors, the Board has resolved to change the use of net proceeds from the Global Offering. The proportion of net proceeds for domestic and overseas acquisitions will be reduced to supplement the working capital and be mainly used for prototype research and development as well as trial-making process, bulk production and delivery of products contained in the global tender procurement order of the Indian Railways (the "Indian Project"), of which the Company won the bid during December 2018 to the first half of 2019.

By tightly grasping opportunities arising from major national policies, such as the "One Belt, One Road" initiative, the Company has continuously strengthened the investment intensity in overseas policies, funds, talents and equipment, promoted the "venture abroad" strategy and successfully won the bid of the Indian Project with a contract value of US$0.107 billion (equivalent to approximately RMB0.738 billion) containing 3 types of products and 71 equipment. According to the global tender terms of the Indian Railways, no prepayment shall be paid for the Indian Project and the contract payment shall be settled by instalments upon the delivery of products. Therefore, the funds for prototype research and development as well as trial-making process, bulk production and delivery of products in the preliminary stage of the project will be advanced by the Company with its working capital.

Upon investigation and research, the Company currently has not yet identified any suitable acquisition targets for its domestic and overseas acquisitions, resulting in a low efficiency of the capital use. Meanwhile, the Company requires more working capital to provide strong support for the delivery of orders of the Indian Project. As such, based on the interest of the Company and its Shareholders as a whole, and in view of strengthening the efficiency and effectiveness of the capital use, the use of proceeds is appropriately adjusted to better meet the current business needs of the Company, which also enables the Company to invest its financial sources in a more beneficial and effective way so as to cooperate in the future development of the Company and grasp the potential business opportunities in the future. The re-allocation of 14.45% of the net proceeds in an amount of approximately RMB0.33 billion, which were originally allocated for general domestic and overseas mergers and acquisitions, to supplement the working capital for the Indian Project is more beneficial to meet the operation needs of the Company and increase its financial effects.

The Board considers that the development direction of the Company is still in line with the disclosure in the Prospectus in spite of such change in use of proceeds as stated above. The aforesaid change in the use of net proceeds from the Global Offering is in the interest of the Company and its Shareholders as a whole.

By Order of the Board

CRCC High-Tech Equipment Corporation Limited

Chairman

Liu Feixiang

Kunming, the People's Republic of China, 9 December 2019

As at the date of this announcement, the Board of the Company comprises Mr. Liu Feixiang, Mr. Tong Pujiang and Mr. Chen Yongxiang, as executive directors; Mr. Zhao Hui, Mr. Sha Mingyuan and Mr. Wu Zhixu, as non-executive directors; and Mr. Sun Linfu, Mr. Yu Jiahe and Mr. Wong Hin Wing, as independent non-executive directors.

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