(1) Proposed extension of validity period of the resolution in respect of the proposed h share issue and related matters including extension of validity period of the authorization to the board to deal with matters relating to the proposed h share issue; (2) connected transaction relating to proposed subscription of new h shares by a connected person; and (3) proposed amendments to the articles of association

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about any of the contents of this circular or as to what action to take in relation to this circular, you should consult appropriate independent advisers to obtain independent professional advice.

If you have sold or transferred all your shares in IRICO Group New Energy Company Limited*, you should at once hand this circular to the purchaser or the transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the 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.

彩 虹 集 團 新 能 源 股 份 有 限 公 司

IRICO GROUP NEW ENERGY COMPANY LIMITED*

1. PROPOSED EXTENSION OF VALIDITY PERIOD OF THE RESOLUTION IN RESPECT OF THE PROPOSED H SHARE ISSUE AND RELATED MATTERS
2. 
   INCLUDING EXTENSION OF VALIDITY PERIOD OF THE AUTHORIZATION TO THE BOARD TO

   DEAL WITH MATTERS RELATING TO THE PROPOSED H SHARE ISSUE;

3. CONNECTED TRANSACTION RELATING TO PROPOSED SUBSCRIPTION OF NEW H SHARES BY A CONNECTED PERSON; AND
4. 1. PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

Financial Adviser

China Securities (International) Corporate Finance Company Limited

Independent Financial Adviser to

the Independent Board Committee and the Independent Shareholders

A letter from the Board is set out on pages 1 to 17 of this circular. A letter from the Independent Board Committee is set out on pages 18 to 19 of this circular. A letter from Octal Capital, the independent financial adviser, containing its advice and recommendation to the Independent Board Committee and the Independent Shareholders is set out on pages 20 to 49 of this circular.

The EGM will be held at the conference room of the Company at No. 1 Caihong Road, Xianyang, Shaanxi Province, the PRC at 9:00 a.m. on Monday, 20 January 2020. The H Share Class Meeting will be held at the conference room of the Company at No. 1 Caihong Road, Xianyang, Shaanxi Province, the PRC at 10:00 a.m. on Monday, 20 January 2020 (or after the conclusion or adjournment of the EGM). Please refer to the notice of the EGM and the notice of the H Share Class Meeting dated 6 December 2019 published on the Stock Exchange's website and the Company's website.

31 December 2019

• For identification purpose only

APPENDIX II - GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

- i -

DEFINITIONS

In this circular, unless the context otherwise requires, the following terms shall have the following meanings:

- ii -

- iii -

- iv -

- v -

- vi -

The English names of the PRC entities adopted in this circular marked "*" are translations from their Chinese names for identification purpose only.

- vii -

LETTER FROM THE BOARD

彩 虹 集 團 新 能 源 股 份 有 限 公 司

IRICO GROUP NEW ENERGY COMPANY LIMITED*

- 1 -

LETTER FROM THE BOARD

To the Shareholders,

Dear Sir or Madam,

1. PROPOSED EXTENSION OF VALIDITY PERIOD OF THE RESOLUTION IN RESPECT OF THE PROPOSED H SHARE ISSUE AND RELATED MATTERS
2. 
   INCLUDING EXTENSION OF VALIDITY PERIOD OF THE AUTHORIZATION TO THE BOARD TO

   DEAL WITH MATTERS RELATING TO THE PROPOSED H SHARE ISSUE;

3. CONNECTED TRANSACTION RELATING TO PROPOSED SUBSCRIPTION OF NEW H SHARES BY A CONNECTED PERSON; AND
4. 1. PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

1. INTRODUCTION
   Reference is made to the notice of the EGM and the notice of the H Share Class Meeting of the Company dated 6 December 2019 which set out the time and venue of the EGM and the H Share Class Meeting and contain the resolutions to be proposed at the EGM and the H Share Class Meeting for the consideration and approval of the Shareholders, the Independent Shareholders or the holders of H Shares (as the case may be).
   The main purpose of this circular is, among other things, to provide the Shareholders with:
2. 1. details of the proposed extension of validity period of the resolution in respect of the Proposed H Share Issue and related matters, including the extension of validity period of the authorization to the Board to deal with matters relating to the Proposed H Share Issue, and the Proposed Subscription by Zhongdian IRICO;
   2. the opinion and recommendation of the Independent Board Committee on the Proposed Subscription by Zhongdian IRICO; and
   3. a letter of advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders containing its opinion and recommendation on the Proposed Subscription by Zhongdian IRICO.

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LETTER FROM THE BOARD

1. PROPOSED EXTENSION OF VALIDITY PERIOD OF THE RESOLUTION IN RESPECT OF THE PROPOSED H SHARE ISSUE AND RELATED MATTERS INCLUDING EXTENSION OF VALIDITY PERIOD OF THE AUTHORIZATION TO THE BOARD TO DEAL WITH MATTERS RELATING TO THE PROPOSED H SHARE ISSUE
   References are made to: (i) the announcement of the Company dated 24 July 2017 in relation to the Proposed H Share Issue, the Proposed Subscription by Zhongdian IRICO and the Proposed Subscription by Yan'an Dingyuan; (ii) the announcement of the Company dated 16 October 2017 in relation to the Proposed Subscription by Zhangjiagang Investment; (iii) the announcement of the Company dated 1 February 2018 in relation to the adjustments to the Proposed H Share Issue; (iv) the announcement of the Company dated 18 April 2018 in relation to the Proposed Subscription by Hefei Xincheng; (v) the announcement of the Company dated 10 December 2018 in relation to the receipt of approval from SASAC in respect of the Proposed H Share Issue; (vi) the notice of the Previous EGM and the notice of the Previous H Share Class Meeting dated 6 December 2018; (vii) the circular of the Company dated 31 December 2018 in relation to the Proposed H Share Issue, connected transaction relating to proposed subscription of new H Shares by a connected person, and proposed amendments to the Articles of Association; (viii) the announcement of the Company dated 23 January 2019 in relation to the poll results of the Previous EGM and Previous H Share Class Meeting; and (ix) the announcement of the Company dated 6 June 2019 in relation to the receipt of approval from CSRC in respect of the Proposed H Share Issue.
   As disclosed in the poll results announcement of the Company dated 23 January 2019, the resolution in relation to the Proposed H Share Issue under the specific mandate, including the authorization to the Board to deal with matters relating to the Proposed H Share Issue, was approved at the Previous EGM and the Previous H Share Class Meeting, respectively, by the Shareholders or the holders of H Shares (as the case may be). Therefore, the validity period of the abovementioned resolution will expire on 22 January 2020.
   As at the Latest Practicable Date, the Company has received the approvals from the SASAC and the CSRC, respectively. The Company still need certain amount of time to approach and negotiate with the other potential investors and handle the administrative matters for the implementation of Proposed H Share Issue. The Proposed H Share Issue is expected to be implemented within 2020, which may be affected by and adjusted based on the market conditions and the actual progress. In order to ensure the smooth implementation of Proposed H Share Issue, the Board considered that it is in the best interests of the Company and its Shareholders as a whole to extend the validity period of the resolution in respect of the Proposed H Share Issue and related matters, including the validity period of the authorization to the Board to deal with matters relating to the Proposed H Share Issue for another 12 months from the date of passing such resolution at the EGM and the H Share Class Meeting, respectively.

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LETTER FROM THE BOARD

Save as disclosed in this circular, all other information relating to the Proposed H Share Issue shall remain unchanged. For details of the Proposed H Share Issue, please refer to Appendix I to this circular.

1. PROPOSED SUBSCRIPTION BY ZHONGDIAN IRICO, ZHANGJIAGANG INVESTMENT, YAN'AN DINGYUAN AND HEFEI XINCHENG
   1. Proposed Subscription by Zhongdian IRICO
2. 1. New H Shares to be subscribed by Zhongdian IRICO

As part of the Proposed H Share Issue, the Company entered into the Subscription Agreement with Zhongdian IRICO in relation to the Proposed Subscription by Zhongdian IRICO on 24 July 2017. Pursuant to such agreement, Zhongdian IRICO has conditionally agreed to subscribe in cash for and the Company has conditionally agreed to allot and issue not more than 900 million new H Shares at a consideration of RMB900 million.

Immediately upon completion of the Proposed Subscription by Zhongdian IRICO, assuming that the number of new H Shares issuable under the Proposed H Share Issue is 2.3 billion H Shares and the number of new H Shares subscribed by Zhongdian IRICO is 900 million H Shares, CEC will hold in aggregate 2,533,014,000 Shares consisting of 1,601,468,000 Domestic Shares through IRICO Group, 31,546,000 H Shares through Rui Bou Electronics and 900 million new H Shares through Zhongdian IRICO, representing approximately 55.89% of the enlarged total issued share capital of the Company.

The actual number of new H Shares to be allotted and issued by the Company to Zhongdian IRICO pursuant to the Subscription Agreement with Zhongdian IRICO shall be equivalent to the consideration to be paid by Zhongdian IRICO (i.e., RMB900 million) divided by the subscription price (round up to the nearest integral number of new H Shares). Even if the Company reduces the size of issue as a result of under- subscription by other investors (other than Zhongdian IRICO), Zhongdian IRICO will still subscribe for the new H Shares to be allotted by the Company at a consideration of RMB900 million, provided that the Company complies with the public float requirements under Rule 8.08 of the Listing Rules. The Proposed Subscription by Zhongdian IRICO is not conditional on subscription by other investors.

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LETTER FROM THE BOARD

1. Subscription price and pricing principle

The subscription price of the new H Shares to be issued to Zhongdian IRICO under the Subscription Agreement with Zhongdian IRICO shall be the same as that of the new H Shares to be issued to the other target subscribers, subject to the same pricing principle as set out under the paragraph headed "5. Subscription price and pricing principle" in Appendix I to this circular.

1. Conditions precedent

The Proposed Subscription by Zhongdian IRICO is subject to satisfaction of the following conditions, including but not limited to:

1. the proposed issue of new H Shares under a specific mandate having been approved at the EGM and the H Share Class Meeting, and the authorizations having been granted to the Board;
2. the Proposed Subscription by Zhongdian IRICO having been approved at the EGM by the Independent Shareholders (including but not limited to the consideration and approval of the Subscription Agreement with Zhongdian IRICO and all connected transactions contemplated thereunder), and the authorizations having been granted to the Board;
3. the competent authorities and regulatory departments, such as the CSRC and SASAC, having approved the Proposed H Share Issue pursuant to the specific mandate; and
4. the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, all of the new H Shares to be issued and placed pursuant to the Proposed H Share Issue.

Neither the Company nor Zhongdian IRICO has the right to waive any of the conditions set out in sub-paragraphs (a) to (d) above. As at the Latest Practicable Date, all the conditions have been fulfilled except for the condition set out in sub-paragraph

1. above. As the validity period of the resolution in relation to the Proposed H Share Issue under the specific mandate, including the authorization to the Board to deal with matters relating to the Proposed H Share Issue, set out in sub-paragraph (a) will expire on 22 January 2020, a special resolution will be proposed at the EGM and the H Share Class Meeting, respectively, to approve the extension of such validity period.

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LETTER FROM THE BOARD

1. Implications under the Listing Rules

As at the Latest Practicable Date, Zhongdian IRICO, which is directly held as to 72.08% by CEC (the ultimate controlling Shareholder), is an associate of CEC and thus a connected person of the Company. Therefore, the Proposed Subscription by Zhongdian IRICO constitutes a connected transaction of the Company and is subject to the reporting, announcement and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

As at the date of the Board meeting, certain Directors, namely, Mr. Si Yuncong and Mr. Fan Laiying, by virtue of their respective existing senior positions in IRICO Group, may be considered as having a material interest in the Proposed Subscription by Zhongdian IRICO. As such, they have abstained from voting on the Board resolution in respect of the Proposed Subscription by Zhongdian IRICO. Save as stated above, none of the other Directors has a material interest in the Proposed Subscription by Zhongdian IRICO and hence no other Director has abstained from voting on such resolution.

The terms of the Proposed Subscription by Zhongdian IRICO were determined after arm's length negotiations between the Company and Zhongdian IRICO. The Directors (including the independent non-executive Directors, whose opinion has been formed after taking into account the advice provided by the independent financial adviser) are of the view that the terms of the Proposed Subscription by Zhongdian IRICO (including the subscription price) are on normal commercial terms, are fair and reasonable taking into consideration the prevailing market conditions and are in the interests of the Company and its Shareholders as a whole, but it is not conducted in the ordinary or usual course of business of the Company due to the nature of such transaction.

2. Proposed Subscription by Zhangjiagang Investment

1. New H Shares to be subscribed by Zhangjiagang Investment

As part of the Proposed H Share Issue, the Company entered into the Subscription Agreement with Zhangjiagang Investment in relation to the Proposed Subscription by Zhangjiagang Investment on 16 October 2017. Pursuant to such agreement, Zhangjiagang Investment has conditionally agreed to subscribe in cash for and the Company has conditionally agreed to allot and issue not more than 500 million new H Shares at a consideration of RMB500 million.

The actual number of new H Shares to be allotted and issued by the Company to Zhangjiagang Investment pursuant to the Subscription Agreement with Zhangjiagang Investment shall be equivalent to the consideration to be paid by Zhangjiagang Investment (i.e., RMB500 million) divided by the subscription price (round up to the

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LETTER FROM THE BOARD

nearest integral number of new H Shares). Even if the Company reduces the size of issue as a result of under-subscription by other investors (other than Zhangjiagang Investment), Zhangjiagang Investment will still subscribe for the new H Shares to be allotted by the Company at a consideration of RMB500 million, provided that the Company complies with the public float requirements under Rule 8.08 of the Listing Rules. The Proposed Subscription by Zhangjiagang Investment is not conditional on subscription by other investors.

1. Subscription price and pricing principle

The subscription price of the new H Shares to be issued to Zhangjiagang Investment under the Subscription Agreement with Zhangjiagang Investment shall be the same as that of the new H Shares to be issued to the other target subscribers, subject to the same pricing principle as set out under the paragraph headed "5. Subscription price and pricing principle" in Appendix I to this circular.

1. Conditions precedent

The Proposed Subscription by Zhangjiagang Investment is subject to satisfaction of the following conditions, including but not limited to:

1. the proposed issue of new H Shares under a specific mandate having been approved at the EGM and the H Share Class Meeting, and the authorizations having been granted to the Board;
2. the competent authorities and regulatory departments, such as the CSRC and SASAC, having approved the Proposed H Share Issue pursuant to the specific mandate; and
3. the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, all of the new H Shares to be issued and placed pursuant to the Proposed H Share Issue.

Neither the Company nor Zhangjiagang Investment has the right to waive any of the conditions set out in sub-paragraphs (a) to (c) above. As at the Latest Practicable Date, all the conditions have been fulfilled except for the condition set out in sub-paragraph

1. above. As the validity period of the resolution in relation to the Proposed H Share Issue under the specific mandate, including the authorization to the Board to deal with matters relating to the Proposed H Share Issue, set out in sub-paragraph (a) will expire on 22 January 2020, a special resolution will be proposed at the EGM and the H Share Class Meeting, respectively, to approve the extension of such validity period.

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LETTER FROM THE BOARD

3. Proposed Subscription by Yan'an Dingyuan

1. New H Shares to be subscribed by Yan'an Dingyuan

As part of the Proposed H Share Issue, the Company entered into the Subscription Agreement with Yan'an Dingyuan in relation to the Proposed Subscription by Yan'an Dingyuan on 24 July 2017. Pursuant to such agreement, Yan'an Dingyuan has conditionally agreed to subscribe in cash for and the Company has conditionally agreed to allot and issue not more than 300 million new H Shares at a consideration of RMB300 million.

The actual number of new H Shares to be allotted and issued by the Company to Yan'an Dingyuan pursuant to the Subscription Agreement with Yan'an Dingyuan shall be equivalent to the consideration to be paid by Yan'an Dingyuan (i.e., RMB300 million) divided by the subscription price (round up to the nearest integral number of new H Shares). Even if the Company reduces the size of issue as a result of under- subscription by other investors (other than Yan'an Dingyuan), Yan'an Dingyuan will still subscribe for the new H Shares to be allotted by the Company at a consideration of RMB300 million. The Proposed Subscription by Yan'an Dingyuan is not conditional on subscription by other investors.

1. Subscription price and pricing principle

The subscription price of the new H Shares to be issued to Yan'an Dingyuan under the Subscription Agreement with Yan'an Dingyuan shall be the same as that of the new H Shares to be issued to the other target subscribers, subject to the same pricing principle as set out under the paragraph headed "5. Subscription price and pricing principle" in Appendix I to this circular.

1. Conditions precedent

The Proposed Subscription by Yan'an Dingyuan is subject to satisfaction of the following conditions, including but not limited to:

1. the proposed issue of new H Shares under a specific mandate having been approved at the EGM and the H Share Class Meeting, and the authorizations having been granted to the Board;

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LETTER FROM THE BOARD

1. the competent authorities and regulatory departments, such as the CSRC and SASAC, having approved the Proposed H Share Issue pursuant to the specific mandate; and
2. the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, all of the new H Shares to be issued and placed pursuant to the Proposed H Share Issue.

Neither the Company nor Yan'an Dingyuan has the right to waive any of the conditions set out in sub-paragraphs (a) to (c) above. As at the Latest Practicable Date, all the conditions have been fulfilled except for the condition set out in sub-paragraph

4. Proposed Subscription by Hefei Xincheng

1. New H Shares to be subscribed by Hefei Xincheng

As part of the Proposed H Share Issue, the Company entered into the Subscription Agreement with Hefei Xincheng in relation to the Proposed Subscription by Hefei Xincheng on 18 April 2018. Pursuant to such agreement, Hefei Xincheng has conditionally agreed to subscribe in cash for and the Company has conditionally agreed to allot and issue not more than 200 million new H Shares at a consideration of RMB200 million.

The actual number of new H Shares to be allotted and issued by the Company to Hefei Xincheng pursuant to the Subscription Agreement with Hefei Xincheng shall be equivalent to the consideration to be paid by Hefei Xincheng (i.e., RMB200 million) divided by the subscription price (round up to the nearest integral number of new H Shares). Even if the Company reduces the size of issue as a result of under-subscription by other investors (other than Hefei Xincheng), Hefei Xincheng will still subscribe for the new H Shares to be allotted by the Company at a consideration of RMB200 million. The Proposed Subscription by Hefei Xincheng is not conditional on subscription by other investors.

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LETTER FROM THE BOARD

1. Subscription price and pricing principle

The subscription price of the new H Shares to be issued to Hefei Xincheng under the Subscription Agreement with Hefei Xincheng shall be the same as that of the new H Shares to be issued to the other target subscribers, subject to the same pricing principle as set out under the paragraph headed "5. Subscription price and pricing principle" in Appendix I to this circular.

1. Conditions precedent

The Proposed Subscription by Hefei Xincheng is subject to satisfaction of the following conditions, including but not limited to:

1. the proposed issue of new H Shares under a specific mandate having been approved at the EGM and the H Share Class Meeting, and the authorizations having been granted to the Board;
2. the competent authorities and regulatory departments, such as the CSRC and SASAC, having approved the Proposed H Share Issue pursuant to the specific mandate; and
3. the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, all of the new H Shares to be issued and placed pursuant to the Proposed H Share Issue.

Neither the Company nor Hefei Xincheng has the right to waive any of the conditions

1. to (c) above. As at the Latest Practicable Date, all the conditions have been fulfilled except for the condition set out in sub-paragraph (c) above. As the validity period of the resolution in relation to the Proposed H Share Issue under the specific mandate, including the authorization to the Board to deal with matters relating to the Proposed H Share Issue, set out in sub-paragraph (a) will expire on 22 January 2020, a special resolution will be proposed at the EGM and the H Share Class Meeting, respectively, to approve the extension of such validity period.

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LETTER FROM THE BOARD

5. Possible Changes in Share Capital and Shareholding Structure

For reference and illustrative purposes only, assuming that: (i) the specific mandate is granted by the Shareholders at the forthcoming EGM and the H Share Class Meeting; (ii) the Board exercises in full the specific mandate to issue new H Shares; (iii) all conditions for the issue and placing of new H Shares have been satisfied; (iv) each of Zhongdian IRICO, Zhangjiagang Investment, Yan'an Dingyuan and Hefei Xincheng subscribes for 900 million, 500 million, 300 million and 200 million new H Shares; and (v) other investors subscribe for 400 million new H Shares, respectively, the possible changes in the share capital and shareholding structure of the Company will be as follows:

Notes:

1. Rui Bou Electronics is a wholly-owned subsidiary of IRICO Group as at the Latest Practicable Date, and thus the shares held by it are not regarded as being in public hands;

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LETTER FROM THE BOARD

1. Zhongdian IRICO is directly held as to 72.08% by CEC and 27.92% by IRICO Group as at the Latest Practicable Date, and thus the shares held by it will not be regarded as being in public hands;
2. Zhangjiagang Investment will be regarded as a core connected person of the Company directly holding approximately 11.03% of the enlarged total issued share capital of the Company immediately after the full exercise of the specific mandate, and thus the shares held by it will not be regarded as being in public hands;
3. Yan'an Dingyuan and its ultimate beneficial owners are and will be third parties independent of the Company and its connected persons as at the Latest Practicable Date and immediately after the full exercise of the specific mandate, and thus the shares held by it will be regarded as being in public hands;
4. Hefei Xincheng and its ultimate beneficial owners are and will be third parties independent of the Company and its connected persons as at the Latest Practicable Date and immediately after the full exercise of the specific mandate, and thus the shares held by it will be regarded as being in public hands;
5. it is intended that any of the other target subscribers and their respective ultimate beneficial owners are and will be third parties independent of the Company and its connected persons, and thus the shares held by them will be regarded as being in public hands;
6. the public float is expected to be 33.08% upon completion of the Proposed H Share Issue; and
7. any discrepancies in this table between totals and sums of amounts listed herein are due to rounding.

Under the circumstance of under-subscription for the new H Shares proposed to be issued by Yan'an Dingyuan, Hefei Xincheng or other investors, where may lead to the situation that the percentage of H Shares in public hands becomes less than the required minimum, each of the Company, Zhongdian IRICO and Zhangjiagang Investment provides that the number of new H Shares to be allotted and issued to Zhongdian IRICO or Zhangjiagang Investment (as the case may require) will be reduced through arm's length negotiation in order to maintain the public float as required under Rule 8.08 of the Listing Rules (i.e., at least 25% of the Company's total number of issued shares must at all times be held by the public).

Upon completion of the Proposed H Share Issue, CEC and IRICO Group will remain as the controlling Shareholder of the Company, and the Proposed H Share Issue will not result in a change in control of the Company.

6. Possible Application for Listing

Should the Board, upon obtaining the specific mandate, proceed to exercise the specific mandate to issue new H Shares, the Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, all of the new H Shares to be issued and placed pursuant to the Proposed H Share Issue.

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LETTER FROM THE BOARD

7. General Information

The Company is principally engaged in the construction and operation of solar power plants; the research, development, production and sales of solar photovoltaic glass, solar cell modules and relevant products, upstream materials of lithium battery and materials relevant to flat panel display; and the processing of quartz sand, an upstream material for photovoltaic glass.

Zhongdian IRICO is principally engaged in the research, development, services and transfer of electronic information technology, industrial investment and assets operation management services, property investment and property operation management services.

Zhangjiagang Investment is principally engaged in equity investment, investment management and investment consultation. The ultimate beneficial owners of Zhangjiagang Investment are Collective Assets Management Commission of Yangshe Town, Zhangjiagang City* (張家港市楊舍鎮集體資產管理委員會) (a collective-owned organization) and Administration Commission of Zhangjiagang Economic and Technological Development Zone* (張家港經濟技術開發區管理委員會) (a state-owned organization), who hold 75% and 25% equity interest in Zhangjiagang Investment, respectively.

Yan'an Dingyuan is principally engaged in financing services and loans in uniform arrangement for small and medium enterprises; external investment; investment management and consultation; and finance consultation. The ultimate beneficial owners of Yan'an Dingyuan are Finance Bureau of Yan'an City* (延安市財政局) and CDB Development Fund Co., Ltd.* (國開發展基金有限公司), who hold 51.67% and 48.33% equity interest in Yan'an Dingyuan, respectively.

Hefei Xincheng is a wholly state-owned company with limited liability incorporated in the PRC and is principally engaged in the investment, operation and management of state-owned assets and project investment management; the investment, financing, construction, operation and management of urban infrastructure and public municipal facilities; the construction, investment, operation and management of park infrastructure; the development of state-owned land; the investment in property development projects; parking lot services; housing leases and storage services (except hazardous articles). The ultimate beneficial owner of Hefei Xincheng is the State-owned Assets Management Bureau of Hefei Xinzhan High-tech Industrial Development Zone* (合肥新站高新技術產業開發區國有資產管理局), who holds 100% equity interest in Hefei Xincheng.

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LETTER FROM THE BOARD

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, Zhangjiagang Investment, Yan'an Dingyuan, Hefei Xincheng and their respective ultimate beneficial owners are third parties independent of the Company and its connected persons. None of them has any prior dealings with the Company.

8. Reasons for and Benefits of the Proposed H Share Issue

1. Apart from the Proposed H Share Issue to specific investors for financing, the Company also considered the fund-raising methods such as issue of convertible corporate bonds and rights issue. Given that (i) as the Company is currently suffering from the high gearing ratio, the issuance of convertible corporate bonds will further heighten the gearing ratio of the Company, thus jeopardizing the improvement of asset structure of the Company; (ii) the Company, being a joint stock Company incorporated in the People's Republic of China with limited liability, shall not issue new shares at the par value of each share lower than RMB1 pursuant to relevant laws, and the issuance of new H shares at the price far higher than the value of net asset per share by the Company to substantial Shareholders and external investors is beneficial for the increase in net asset per share of the Company and enables the existing public investors to enjoy the benefits resulting from increase in net asset per share without any capital injection. On the contrary, in case of fund raising from solely the existing Shareholders by way of share offer, financing results will not be as fruitful as the foregoing;

2. as there are heavy capital demands in the projects which the proceeds are about to be invested in, it is expected that financing by way of issuance of convertible corporate bonds or share offer may result in a failure in fulfilment of such capital demands, the Company did not adopt such financing methods. In addition, the Company also sought to carry out financing lease, factoring of accounts receivable, supply chain financing, industry funds and other financing channels to acquire the funds required, and communicate with industry funds, financial institutions, etc. However, due to the high financing costs and cumbersome approval procedures, such methods cannot effectively improve the Company's asset-liability structure. Therefore, the Company did not adopt such methods for financing.

The Board believes that the Proposed H Share Issue offers a good opportunity to raise capital for the Group's Yan'an Photovoltaic Glass Project, Hefei Photovoltaic Glass Project (Phase II), Xianyang Photovoltaic Glass Relocation and Technical Innovation Project and IRICO Yongneng 2GW Photovoltaic Modules Project. The gross proceeds from the Proposed H Share Issue will be mainly used for project construction and replenishing working capital. The proceeds, upon being received, will increase the net assets value per Share of the Company and lower the gearing ratio. The gearing ratio of the Company will decrease from 94.40% as at 30 June 2019 to approximately 62.7% (assuming the gross proceeds being approximately RMB2.3 billion). Upon being put into production, the projects will help the Company expand its business, thus further enhancing the profitability of the Company and improving the financing environment.

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LETTER FROM THE BOARD

Currently, all of the businesses of the Company are in normal operation being financed by its own funds and the borrowings. Upon completion of the Proposed H Share Issue, such borrowings will be replaced by the proceeds from the Proposed H Share Issue, thus lowering the financing costs and optimizing the asset structure of the Company. The Board also believes that the delay in completion of the Proposed H Share Issue does not have any material adverse impact on the Company's development plan and the proceeds from the Proposed H Share Issue would satisfy the Company's expected funding needs for the next 12 months.

In March 2016, the Company's name was changed from IRICO GROUP ELECTRONICS COMPANY LIMITED* (彩虹集團電子股份有限公司) into IRICO GROUP NEW ENERGY COMPANY LIMITED* (彩虹集團新能源股份有限公司). The Company has realised transformation from the traditional colour picture tubes industry to solar photovoltaic glass, solar photovoltaic power station, new materials and other new industries. The gross proceeds from the Proposed H Share Issue will be used for photovoltaic glass and photovoltaic modules projects and can facilitate the development of new energy businesses of the Company in a better way, which is in line with the aforesaid development strategies for business transformation.

In addition, the Board believes that the Proposed Subscription by Zhongdian IRICO is beneficial for the Company to optimize its shareholding structure and asset structure.

9. Fund Raising Activities in the Past 12 Months

The Company has not conducted any fund raising activities involving the issue of equity securities in the 12 months immediately prior to the Latest Practicable Date.

IV. PROPOSED AMENDMENTS OF THE ARTICLES OF ASSOCIATION

As a result of the issue of new H Shares pursuant to the Proposed H Share Issue, the shareholding structure of the Company will change upon completion of the Proposed H Share Issue and as such, the Articles of Association will need to be amended to reflect the relevant changes. A resolution will be proposed at the EGM and the H Share Class Meeting to approve the granting of an authorization to the Board to arrange for the necessary amendments to Article 22 of the Articles of Association after completion of the Proposed H Share Issue. The exact amendments to the Articles of Association cannot be confirmed unless and until the Proposed H Share Issue has been completed. Details of the amendments to the Articles of the Association is set out as follows.

- 15 -

LETTER FROM THE BOARD

Adding the new Clause 4 of Article 22 as:

"Approved by the extraordinary general meeting and the class meeting of the holders of H Shares dated 23 January 2019 and 20 January 2020, the Company has completed the non-public issuance of [•] shares of overseas-listed foreign investment shares, the registered capital being changed into RMB[•], the total number of shares being changed into [•] shares, of which 1,601,468,000 shares are domestic investment shares, accounting for [•]%, and [•] shares are foreign investment shares, accounting for [•]%."

1. EGM AND H SHARE CLASS MEETING
   The Proposed H Share Issue under a specific mandate shall be considered as a variation of rights of the holders of Domestic Shares and H Shares under the Articles of Association. As such, pursuant to the Articles of Association and Rule 19A.38 of the Listing Rules, the proposed extension of validity period of the resolution in respect of the proposed H Share Issue and related matters is required to be approved by way of a special resolution at a general meeting and separate class meetings of the holders of Domestic Shares and H Shares. Given that Zhongdian IRICO, an associate of IRICO Group, will be a subscriber for the Proposed H Share Issue, IRICO Group directly holding 1,601,468,000 Domestic Shares and indirectly holding 31,546,000 H Shares through Rui Bou Electronics, representing 100% of the existing issued Domestic Shares and approximately 73.15% of the issued share capital of the Company as at the Latest Practicable Date, may be considered as having a material interest in the Proposed H Share Issue. As such, IRICO Group and its subsidiary, Rui Bou Electronics, will be required to abstain from voting at the EGM and the class meeting of the holders of Domestic Shares (if convened) on the resolutions in relation to the Proposed H Share Issue. Accordingly, the Board will not convene a class meeting of the holders of Domestic Shares to consider and approve the resolutions in relation to the Proposed H Share Issue. The resolutions in relation to the Proposed H Share Issue will only be put forward at the EGM and the H Share Class Meeting, respectively, for the consideration and approval of the Shareholders or the holders of H Shares (as the case may be).
   The resolution in relation to the Proposed Subscription by Zhongdian IRICO will be put forward by way of a special resolution at the EGM for the consideration and approval of the Independent Shareholders.
   CEC and its associates, including IRICO Group and its subsidiary, Rui Bou Electronics, which directly hold 1,601,468,000 Domestic Shares and 31,546,000 H Shares, representing an aggregate of approximately 73.15% of the issued share capital of the Company as at the Latest Practicable Date, will be required to abstain from voting at the EGM on the resolutions in relation to the Proposed Subscription by Zhongdian IRICO.

- 16 -

LETTER FROM THE BOARD

The Independent Board Committee has been formed in accordance with the Listing Rules to advise the Independent Shareholders on the Proposed Subscription by Zhongdian IRICO. In this connection, Octal Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Proposed Subscription by Zhongdian IRICO.

VI. RECOMMENDATIONS

The Directors (including the independent non-executive Directors) are of the view that the proposed extension of validity period of the resolution in respect of the Proposed H Share Issue and related matters, including the extension of validity period of the authorization to the Board to deal with matters relating to the Proposed H Share Issue, is in the best interests of the Company and its Shareholders as a whole.

The Directors (including the independent non-executive Directors) are of the view that the terms of the Proposed Subscription by Zhongdian IRICO (including the subscription price) are on normal commercial terms, are fair and reasonable taking into consideration the prevailing market conditions and are in the interests of the Company and its Shareholders as a whole, but it is not conducted in the ordinary or usual course of business of the Company due to the nature of such transaction.

Accordingly, the Directors recommend the Shareholders or the Independent Shareholders (as the case may be) to vote in favour of all the resolutions to be proposed at each of the EGM and H Share Class Meeting.

VII. ADDITIONAL INFORMATION

Your attention is drawn to the letter from the Independent Board Committee set out on pages 18 to 19 of this circular containing the recommendation of the Independent Board Committee to the Independent Shareholders concerning the Proposed Subscription by Zhongdian IRICO. The advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders, on the fairness and reasonableness of the terms of the Proposed Subscription by Zhongdian IRICO is set out on pages 20 to 49 of this circular.

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

By order of the Board

IRICO Group New Energy Company Limited*

Si Yuncong

Chairman

• For identification purpose only

- 17 -

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

彩 虹 集 團 新 能 源 股 份 有 限 公 司

IRICO GROUP NEW ENERGY COMPANY LIMITED*

Legal address and the head office in the PRC:

No. 1 Caihong Road

Xianyang, Shaanxi Province

The People's Republic of China

Postal code: 712021

Principal place of business in Hong Kong:

Units 1607-8, 16/F, Citicorp Centre

18 Whitfield Road, Causeway Bay

Hong Kong

Hong Kong share registrar and transfer office:

Computershare Hong Kong Investor Services Limited 17M/F

Hopewell Centre

183 Queen's Road East Hong Kong

31 December 2019

- 18 -

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION RELATING TO PROPOSED

SUBSCRIPTION OF NEW H SHARES BY A CONNECTED PERSON

We refer to the circular of the Company dated 31 December 2019 (the "Circular"), of which this letter forms a part. Terms defined therein shall have the same meanings when used in this letter unless the context otherwise requires.

We have been appointed by the Board as the Independent Board Committee to advise you as to whether in our opinion, the terms of the Proposed Subscription by Zhongdian IRICO are fair and reasonable so far as the Independent Shareholders are concerned, the Proposed Subscription by Zhongdian IRICO are on normal commercial terms and in the ordinary and usual course of business of the Company, and are in the interests of the Company and the Shareholders as a whole.

Octal Capital has been appointed by the Company as the independent financial adviser to advise the Independent Board Committee on the fairness and reasonableness of the terms of the Proposed Subscription by Zhongdian IRICO. Details of the advice from Octal Capital, together with the principal factors taken into consideration in arriving at such advice, are set out in its letter on pages 20 to 49 of the Circular.

We wish to draw your attention to the letter from the Board set out on pages 1 to 17 of the Circular. Having considered the information contained in the letter from the Board, the interests of the Independent Shareholders and the advice and recommendations given by Octal Capital, we consider that the terms of the Proposed Subscription by Zhongdian IRICO are fair and reasonable and on normal commercial terms, and are in the interests of the Company and the Shareholders as a whole, but it is not conducted in the ordinary or usual course of business of the Company due to the nature of such transaction.

Accordingly, we recommend that the Independent Shareholders vote in favour of the resolution regarding the Proposed Subscription by Zhongdian IRICO to be proposed at the EGM.

Independent Board Committee

• For identification purpose only

- 19 -

LETTER FROM OCTAL CAPITAL

Pursuant to the Subscription Agreements, each of Zhongdian IRICO, Zhangjiagang Investment, Yan'an Dingyuan and Hefei Xincheng has conditionally agreed to subscribe in cash for, and the Company has conditionally agreed to allot and issue, not more than 900 million, 500 million, 300 million and 200 million new H Shares at a consideration of RMB900 million, RMB500 million, RMB300 million and RMB200 million, respectively. Immediately upon completion of the Proposed Subscription by Zhongdian IRICO, assuming that the number of new H Shares issuable under the Proposed H Share Issue is 2,300,000,000 H Shares and Zhongdian IRICO subscribed for 900,000,000 H Shares, CEC will hold in aggregate 2,533,014,000 Shares consisting of (i) 1,601,468,000 Domestic Shares through IRICO Group;

1. 31,546,000 H Shares through Rui Bou Electronics; and (iii) 900,000,000 H Shares through Zhongdian IRICO, representing approximately in aggregate 55.89% of the enlarged total issued share capital of the Company. The maximum new H Shares to be subscribed by Zhongdian IRICO represent (i) approximately 40.32% of the existing issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 19.86% of the issued share capital of the Company as enlarged by the Proposed H Share Issue. The Proposed H Share Issue will be made under the specific mandate to be sought at the EGM.

As Zhongdian IRICO, which is directly held as to 72.08% by CEC (the ultimate controlling Shareholder), is an associate of CEC and thus a connected person of the Company, the Proposed Subscription by Zhongdian IRICO constitutes a connected transaction for the Company and is subject to the reporting, announcement and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

We are not connected with the Directors, chief executive and substantial shareholders of the Company or Zhongdian IRICO or IRICO Group or CEC or any of their respective subsidiaries or associates and are therefore considered suitable to give independent advice to the Independent Board Committee and the Independent Shareholders.

During the last two years, we were engaged as an independent financial adviser to the Company (the "Previous Engagements") in respect of (i) the connected and discloseable disposal of 90% equity interest in Kunshan IRICO; (ii) the connected and discloseable disposal of 51% equity interest in Zhuhai Caizhu; (iii) the continuing connected transactions; (iv) the connected transaction relating to the proposed subscription of new H shares by a connected person; and (v) discloseable and connected transactions in relation to accounts receivables assignment agreements (for details please refer to the circulars of the Company dated 3 April 2017, 1 June 2018, 3 December 2018, 31 December 2018 and 28 June 2019 respectively). Under the Previous Engagements, we were required to express our opinion on and give recommendation to the Independent Board Committee and Independent Shareholders in respect of the relevant transactions. Apart from normal professional fees payable to us by the Company in connection with this appointment, no arrangement exists whereby we will receive any fees or benefits from the Company or the directors, chief executive and substantial shareholders of the Company or Zhongdian IRICO or IRICO Group or CEC or any of their respective subsidiaries or associates.

- 21 -

LETTER FROM OCTAL CAPITAL

In formulating our opinion, we have relied on the accuracy of the information and representations contained in the Circular and have assumed that all information and representations made or referred to in the Circular were true at the time they were made and continue to be true as at the Latest Practicable Date. We have also relied on our discussion with the Directors and management of the Company regarding the Group and the Subscription Agreement with Zhongdian IRICO, including the information and representations contained in the Circular. We have also assumed that all statements of belief, opinion and intention made by the Directors and management of the Company in the Circular were reasonably made after due enquiry. We consider that we have reviewed sufficient information to reach an informed view, to justify our reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our advice. We have no reason to suspect that any material facts have been omitted or withheld from the information contained or opinions expressed in the Circular nor to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and management of the Company. We have not, however, conducted an independent in-depth investigation into the business and affairs of the Group, Zhongdian IRICO and their respective associates nor have we carried out any independent verification of the information supplied.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion regarding the terms of the Proposed Subscription by Zhongdian IRICO and giving our independent financial advice to the Independent Board Committee and the Independent Shareholders, we have considered the following principal factors and reasons:

1. Background of and reasons for the Proposed Subscription by Zhongdian IRICO and use of proceeds

The Company is a joint stock company incorporated in the PRC with limited liability, the H Shares of which are listed on the Main Board of the Stock Exchange. The Group is principally engaged in the construction and operation of solar power plants; the research, development, production and sales of solar photovoltaic glass, solar cell modules and relevant products, upstream materials of lithium battery and materials relevant to flat panel display; and the processing of quartz sand, an upstream material for photovoltaic glass.

- 22 -

LETTER FROM OCTAL CAPITAL

Set out below is a summary of the consolidated financial information of the Company for the two years ended 31 December 2017 and 2018 and the six months ended 30 June 2018 and 2019 as extracted from the Company's annual report for the year ended 31 December 2018 (the "2018 Annual Report") and the Company's interim report for the six months ended 30 June 2019 (the "2019 Interim Report"):

Note:

The property, plant and equipment included fixed assets and construction in progress as set out in the 2018 Annual Report and 2019 Interim Report

- 23 -

LETTER FROM OCTAL CAPITAL

As set out above, we noted that (i) the turnover of the Group was approximately RMB2,331.9 million for the year ended 31 December 2018, representing a year-on-year decrease of approximately 5.6% when compared to the year 2017 and (ii) the gross profit (being turnover minus operating costs) of the Group was approximately RMB242.9 million for the year ended 31 December 2018, representing a year-on-year decrease of approximately 12.5% when compared to the year 2017. The decrease was mainly due to the decrease in revenue from trading and other businesses and the significant decrease in the gross profit of photovoltaic glass in the second half of 2018 was mainly attributable to the reduction in prices of photovoltaic glass following the introduction of the "531" new policy. As a result, the Group has recorded a net profit attributable to the owners of the Company of approximately RMB81.3 million, representing a year-on-year decrease of approximately 9.7% when compared to the year 2017. As regards the financial position of the Group, the net assets of the Group decreased from approximately RMB241.6 million as at 31 December 2017 to RMB213.8 million as at 31 December 2018. Such decrease was mainly attributable to a decrease in cash at bank and on hand, decrease in prepayments, decrease in other non-current assets and increase in long-term borrowings.

As set out above, we noted that (i) the turnover of the Group was approximately RMB1,087.1 million for the six months ended 30 June 2019, representing a year-on-year decrease of approximately 6.9% when compared to the corresponding six-month period in 2018 and

1. the gross profit (being turnover minus operating costs) of the Group was approximately RMB99.7 million for the six months ended 30 June 2019, representing a year-on-year decrease of approximately 49.8% when compared to the corresponding six-month period in 2018. The Group has recorded a net profit attributable to the owners of the Company of approximately RMB45.1 million for the six months ended 30 June 2019, representing a year-on-year decrease of approximately 77.7% when compared to the same period in 2018. The decrease was mainly due to the decrease in revenue from photovoltaic business which was attributable to the reduction in the price of photovoltaic glass, the decrease in revenue from trading business and the decrease in compensation for the shutdown of Xianyang photovoltaic project. As regards the financial position of the Group, the net assets of the Group increased from approximately RMB213.8 million as at 31 December 2018 to RMB276.5 million as at 30 June 2019. Such increase was mainly attributable to increase in receivables financing, increase in right-of-use assets, increase in development expenditures and decrease in long-term borrowings which is partially offset by the increase in long- term payables.

- 24 -

LETTER FROM OCTAL CAPITAL

Further, the Company plans to allocate approximately 21.7% of the gross proceeds of Proposed H Share Issue for the investment in IRICO Yongneng 2GW Photovoltaic Modules Project. As advised by the Company, Jiangsu IRICO Yongneng New Energy Company Limited, a subsidiary of the Company, proposes to invest in the construction of the project in Zhangjiagang Economic Development Zone, purchase 200 sets of full-automatic production equipment and photovoltaic modules instruments and equip with the relevant power auxiliary facilities. Upon completion, the annual production capacity of photovoltaic module products is expected to be 2GW and the total investment amount of this project is approximately RMB1.8 billion.

As the PRC government has launched policies to promote and support grid parity for photovoltaic power generation, the demand for installed photovoltaic capacity will change from being policy- oriented to being market-driven, while the global demand for photovoltaic power generation will also develop in a diversified way, and the market demand will increase steadily. The Directors consider that the investment in the Four Projects will consistently improve the vertical consolidation of solar photovoltaic power business, being in line with the government policies as well as interest of the Company in the long run. Moreover, as disclosed in the announcement of the Company dated 3 July 2019, the Company entered into a sales agreement to supply and sale of an aggregate of 68,500,000 square meters of photovoltaic glass with an estimated consideration of RMB1.8 billion. Considering the existing production capacity of the Group and the expected growth of the future demand of the photovoltaic glass, the Directors are of the view that it is necessary to raise capital to support its future development and business expansion.

In order to avoid further increasing its borrowings which would increase the financing costs of the Company and have an adverse impact on the financial position of the Company, the Directors is of the view that, upon completion of the Proposed H Share Issue, the proceeds will be used to mainly finance the Four Projects and to replenish working capital level of the Group, which would, on the other hand, improve the financial and liquidity position of the Group. Upon completion of the Proposed H Share Issue, there will be a dilution impact on the shareholding of CEC. The shareholding of the Company indirectly held by CEC through IRICO Group and its subsidiary, Rui Bou Electronics, will decrease from approximately 73.15% of the issued share capital of the Company as at the Latest Practicable Date to approximately 36.03% of the enlarged total issued share of the Company. In order to maintain CEC's controlling stake over the Company, Zhongdian IRICO has conditionally agreed to subscribe in cash for and the Company has conditionally agreed to allot and issue not more than 900 million new H Shares at a total consideration of RMB900 million. Assuming the full exercise of the specific mandate, the shareholding of Zhongdian IRICO will be 19.86% of the enlarged total issued share capital of the Company upon completion of the Proposed H Share issue. Despite the dilution impact of the Proposed H Share Issue, the shareholding of the Company indirectly held by CEC through IRICO Group, Rui Bou Electronics and Zhongdian IRICO will be approximately 55.89% in total upon the completion of the Proposed H Share Issue. CEC will still be able to maintain the control of the Company and lead the Company in the transformation of business.

- 26 -

LETTER FROM OCTAL CAPITAL

Having considered the above and our discussion with the management of the Company, we concur with the view of the Company that the Proposed Subscription by Zhongdian IRICO is in the interests of the Company and Shareholders as a whole to contribute fund for the Four Projects as to strengthen the capabilities for future development of the Group and also allow CEC to maintain status of ultimate controlling Shareholder in order to steer the business transformation.

2. Terms of Proposed Subscription by Zhongdian IRICO

Pursuant to the Subscription Agreement with Zhongdian IRICO approved by the Board on 24 July 2017, the Company shall allot and issue not more than 900 million new H Shares with a nominal value of RMB1.00 to Zhongdian IRICO as part of the Proposed H Share Issue. The total consideration of RMB900 million shall be payable in cash by Zhongdian IRICO upon Completion.

Pursuant to the Subscription Agreement with Zhongdian IRICO, the subscription price of the new H Shares to be issued to Zhongdian IRICO (the "Subscription Price") shall be the same as that of the new H Shares to be issued to the other target subscribers subject to the same pricing principle.

The Subscription Price shall be determined with reference to the market price of the H Shares, the capital market conditions at the time of issue and the valuation of comparable companies, taking into account the interest of shareholders, the risk appetite of investors, and in accordance with international practices and regulatory requirements.

The Subscription Price shall not be lower than 90% of the average closing price of H Shares as quoted on the Stock Exchange over the five consecutive trading days preceding the price determination date (i.e., the date of signing of the relevant placing agreement). In any event, the issue price shall not be less than the latest audited net asset value per Share before the Proposed H Share Issue and the nominal value of RMB1.00 per H Share.

The net price to the Company of each new H Share to be issued under the Proposed H Share Issue (including the Proposed Subscription by Zhongdian IRICO) will be determined and disclosed upon completion of the Proposed H Share Issue and the determination of the relevant expenses incurred or to be incurred in relation to the Proposed H Share Issue in accordance with the requirements of the Listing Rules.

In order to assess the fairness and reasonableness of the Subscription Price, we made reference to, among other things, (i) a comparison between the Subscription Price and the historical closing prices of the Company's H Shares; and (ii) comparison of Subscription Price with comparables.

- 27 -

LETTER FROM OCTAL CAPITAL

1. A comparison between the Subscription Price and the historical closing prices of the Company's H Shares

Solely for illustration purposes, we consider that it is relevant to compare the closing price level of the Shares traded on the Stock Exchange during the period from 19 April 2017 (being the date twelve months prior to the 18 April 2018 on which the Company entered into the last subscription agreement with the subscriber under the Proposed H Share Issue (the "Last Trading Date")) to 20 December 2018 (the "Previous Latest Practicable Date") (the "Review Period") against the lowest possible subscription price (the "Proposed Minimum Subscription Price") of RMB1.00 (equivalent to approximately HK$1.14). The exchange rate adopted for the above figure is HK$1.00 = RMB0.88 as stated in the quotation of the People's Bank of China as at the Previous Latest Practicable Date.

Historical share price performance

Source: Stock Exchange (www.hkex.com.hk)

- 28 -

LETTER FROM OCTAL CAPITAL

During the Review Period, the average closing price was approximately HK$0.721 per Share. The lowest closing price was HK$0.530, being recorded on 6 December 2018 and 7 December 2018. The highest closing price was HK$0.990, being recorded on 14 November 2017. During the Review Period, there was no material fluctuation of the closing price noted. We noted that the closing price of the whole Review Period was below the Proposed Minimum Subscription Price of RMB1.00 per Share (equivalent to approximately HK$1.14 per Share). Further, we noted that the Proposed Minimum Subscription Price represents:

1. a premium of approximately 15.2% over the maximum closing price of HK$0.990 per Share as quoted on the Stock Exchange during the Review Period;
2. a premium of approximately 115.1% over the minimum closing price of HK$0.530 per Share as quoted on the Stock Exchange during the Review Period;
3. a premium of approximately 58.1% over the average closing price of approximately HK$0.721 per Share for the Review Period as quoted on the Stock Exchange;
4. a premium of approximately 65.2% over the closing price of HK$0.690 per Share as quoted on the Stock Exchange on the Last Trading Date;
5. a premium of approximately 64.7% over the average closing price of HK$0.692 per Share as quoted on the Stock Exchange for the last 5 trading days up to and including the Last Trading Date;
6. a premium of approximately 395.7% over the unaudited net asset value of approximately HK$0.230 as at 30 June 2018 based on the unaudited consolidated net assets attributable to owners of the Company of approximately RMB451,107,577 as at 30 June 2018 and 2,232,349,400 Shares in issue as at the Previous Latest Practicable Date, using the exchange rate of HK$1 = RMB0.88; and
7. a premium of approximately 96.0% over the closing price of HK$0.58 per Share as quoted on the Stock Exchange on the Previous Latest Practicable Date.

In addition, we consider that it is relevant to compare the closing price level of the Shares traded on the Stock Exchange during the period from the day after the Previous Latest Practicable Date (i.e. 21 December 2018) to 23 December 2019 (being the Latest Practicable Date) (the "Extension Review Period") against Proposed Minimum Subscription Price of RMB1.00 (equivalent to approximately HK$1.11). The exchange rate adopted for the above figure is HK$1.00 = RMB0.90 as stated in the quotation of the People's Bank of China as at the Latest Practicable Date.

- 29 -

LETTER FROM OCTAL CAPITAL

Historical share price performance

Source: Stock Exchange (www.hkex.com.hk)

During the Extension Review Period, the average closing price was approximately HK$0.637 per Share. The lowest closing price was HK$0.480, being recorded on 5 November 2019. The highest closing price was HK$0.750, being recorded on 24 January 2019, 8 February 2019, 4 March 2019 to 7 March 2019, 12 March 2019 to 15 March 2019 and 18 March 2019. During the Extension Review Period, there was no material fluctuation of the closing price noted. We noted that the closing price of the whole Extension Review Period was below the Proposed Minimum Subscription Price of RMB1.00 per Share (equivalent to approximately HK$1.11 per Share). Further, we noted that the Proposed Minimum Subscription Price represents:

1. a premium of approximately 48.0% over the maximum closing price of HK$0.750 per Share as quoted on the Stock Exchange during the Extension Review Period;
2. a premium of approximately 131.3% over the minimum closing price of HK$0.480 per Share as quoted on the Stock Exchange during the Extension Review Period;
3. a premium of approximately 74.3% over the average closing price of approximately HK$0.637 per Share for the Extension Review Period as quoted on the Stock Exchange;

- 30 -

LETTER FROM OCTAL CAPITAL

1. a premium of approximately52.1% over the closing price of HK$0.730 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
2. a premium of approximately 53.3% over the average closing price of HK$0.724 per Share as quoted on the Stock Exchange for the last 5 trading days up to and including the Latest Practicable Date; and
3. a premium of approximately 1,287.5% over the unaudited net asset value of approximately HK$0.08 as at 30 June 2019 based on the unaudited consolidated net assets attributable to owners of the Company of approximately RMB169,510,293 as at 30 June 2019 and 2,232,349,400 Shares in issue as at the Latest Practicable Date, using the exchange rate of HK$1 = RMB0.90.

1. Comparison of Subscription Price with comparables
   • Price/earnings multiple

Price-to-earnings multiple (the "P/E Multiple") analysis is the most common approach adopted by the investment community in valuing profit-generating entities. For the purpose of assessing the reasonableness of the Subscription Price, we have identified (to the best of our knowledge) three companies (the "P/E Comparables") which (i) are listed on the Main Board of the Stock Exchange; (ii) are principally engaged in production and sales of solar power related products as that of the Group; and (iii) have market capitalization from HK$1,000 million up to HK$10,000 million that are comparable to the market capitalization of the Company's H Shares, for P/E Multiple analysis. We consider the P/E Comparables set forth in the table below an exhaustive list under such criteria. Summarized below are our relevant findings:

- 31 -

- 32 -

Source: Stock Exchange (www.hkex.com.hk)

Note:

1. The audited profit attributable to owners of the Company and the P/E Comparables are calculated using the exchange rate of HK$1 = RMB0.90.
2. The market capitalization is calculated using the Proposed Minimum Subscription Price multiplied by the total number of issued shares of the Company as at the Last Trading Date.
3. The market capitalization is calculated using the Proposed Minimum Subscription Price multiplied by the total number of issued shares of the Company as at the Previous Latest Practicable Date.
4. The market capitalization is calculated using the Proposed Minimum Subscription Price multiplied by the total number of issued shares of the Company as at the Latest Practicable Date.

CAPITAL OCTAL FROM LETTER

LETTER FROM OCTAL CAPITAL

We note that the P/E Multiples of the P/E Comparables as at the Last Trading Date ranged from approximately 7.0 times to approximately 10.4 times and have an average of approximately 8.5 times and a median of approximately 8.1 times. The P/E Multiple of the Company, where the price was based on Proposed Minimum Subscription Price, was approximately 18.1 times. Upon comparison, we noted that the P/E Multiple of the Company as at the Last Trading Date was higher than the average of P/E Multiples of the P/E Comparables and the median of P/E Multiples of the P/E Comparables.

We also note that the P/E Multiples of the P/E Comparables as at the Previous Latest Practicable Date ranged from approximately 3.9 times to approximately 8.5 times and have an average of approximately 6.5 times and a median of approximately 7.0 times. The P/E Multiple of the Company, where the price was based on Proposed Minimum Subscription Price, was approximately 18.1 times. Upon comparison, we noted that the P/E Multiple of the Company as at the Previous Latest Practicable Date was higher than the average of P/E Multiples of the P/E Comparables and the median of P/E Multiples of the P/E Comparables.

We further note that the P/E Multiples of the P/E Comparables as at the Latest Practicable Date ranged from approximately 4.9 times to approximately 19.1 times and have an average of approximately 12.0 times and a median of approximately 12.0 times. The P/E Multiple of the Company, where the price was based on Proposed Minimum Subscription Price, was approximately 27.5 times. Upon comparison, we noted that the P/E Multiple of the Company as at the Latest Practicable Date was higher than the average of P/E Multiples of the P/E Comparables and the median of P/E Multiples of the P/E Comparables.

• Net asset value

In order to have another perspective for analyzing and assessing the Subscription Price, we have identified (to the best of our knowledge) three companies (the "Industry Comparables") which (i) are listed on the Main Board of the Stock Exchange; (ii) are principally engaged in production and sales of solar power related products as that of the Group; and (iii) and have market capitalizations from HK$1,000 million up to HK$10,000 million that are comparable to the market capitalization of the Company. We consider the Industry Comparables set forth in the table below an exhaustive list under such criteria.

- 33 -

- 34 -

Source: Stock Exchange (www.hkex.com.hk)

Note:

1. The net asset value of the Company and the Industry Comparables are calculated using the exchange rate of HK$1 = RMB0.90.
2. The market capitalisation is calculated using the Proposed Minimum Subscription Price multiplied by the total number of issued shares of the Company as at the Last Trading Date.
3. The market capitalisation is calculated using the Proposed Minimum Subscription Price multiplied by the total number of issued shares of the Company as at the Previous Latest Practicable Date.
4. The market capitalisation is calculated using the Proposed Minimum Subscription Price multiplied by the total number of issued shares of the Company as at the Latest Practicable Date.

CAPITAL OCTAL FROM LETTER

LETTER FROM OCTAL CAPITAL

From the above table, we note that the market capitalization as at the Last Trading Date of the Industry Comparables were at the range from discount of approximately 30.2% to premium of approximately 30.1% to the latest published net asset value attributable to owners of the Industry Comparables. The Proposed Minimum Subscription Price represented a premium over the latest published net asset value attributable to the owner of the Company of approximately 1,362.7%, which is the highest among the premium/discount of the market capitalization as at the Last Trading Date over/to the latest published net asset value attributable to owners of the Industry Comparables. The reason of the Proposed Minimum Subscription Price represented a significantly high level of premium of over the latest published net asset value attributable to owners of the Company is mainly because of the light net asset value position, which is approximately HK$169.6 million, in comparison to the net asset values of the Industry Comparables, which were ranged from approximately HK$3,611.5 million to HK$25,305.8 million.

We also note that the market capitalization as at the Previous Latest Practicable Date of the Industry Comparables were at the range from discount of approximately 66.2% to premium of approximately 0.1% to the latest published net asset value attributable to owners of the Industry Comparables. The Proposed Minimum Subscription Price represented a premium over the latest published net asset value attributable to the owner of the Company of approximately 604.4%, which is the highest among the premium/discount of the market capitalization as at the Previous Latest Practicable Date over/to the latest published net asset value attributable to owners of the Industry Comparables. The reason of the Proposed Minimum Subscription Price represented a significantly high level of premium of over the latest published net asset value attributable to owners of the Company is mainly because of the light net asset value position, which is approximately HK$352.1 million, in comparison to the net asset values of the Industry Comparables, which were ranged from approximately HK$3,849.1 million to HK$25,454.6 million.

We further note that the market capitalization as at the Latest Practicable Date of the Industry Comparables were at the range from discount of approximately 78.4% to premium of approximately 148.8% to the latest published net asset value attributable to owners of the Industry Comparables. The Proposed Minimum Subscription Price represented a premium over the latest published net asset value attributable to the owner of the Company of approximately 1,216.9%, which is the highest among the premium/discount of the market capitalization as at the Latest Practicable Date over/to the latest published net asset value attributable to owners of the Industry Comparables. The reason of the Proposed Minimum Subscription Price represented a significantly high level of premium of over the latest published net asset value attributable to owners of the Company is mainly because of the light net asset value position, which

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LETTER FROM OCTAL CAPITAL

is approximately HK$188.3 million, in comparison to the net asset values of the Industry Comparables, which were ranged from approximately HK$3,495.2 million to HK$23,825.5 million.

• Market comparables on subscription of new shares

In addition to P/E Multiple and net asset value approaches, we also consider it is worthwhile to assess the Subscription Price against the prevailing market trends. We have identified (to the best of our knowledge) an exhaustive list of shares subscriptions/placements (the "Transaction Comparables") for raising funds using specific mandate as announced by companies listed on the Main Board of the Stock Exchange with announcement (i) in the last six months up to the Previous Latest Practicable Date; and (ii) from the day after the Previous Latest Practicable Date to the Latest Practicable Date. We consider that the terms of the comparable fund raising exercises are appropriate benchmarks to reflect the recent market sentiment and risk appetite of the investment community.

For each of the Transaction Comparables identified, we compared the premium/ (discounts) of its subscription price or placing price over/(to) (i) the closing price on the respective last trading date; and (ii) the average closing price for the respective last five consecutive trading days up to and including the respective last trading date, summarised in the following table:

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LETTER FROM OCTAL CAPITAL

1. in the last six months up to the Previous Latest Practicable Date

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LETTER FROM OCTAL CAPITAL

Source: Stock Exchange (www.hkex.com.hk)

Note:

1. The Proposed Minimum Subscription Price.
2. The expected gross proceeds attributable from the Subscription Agreements is calculated using the exchange rate of HK$1 = RMB0.88.

From the above table, we noted that eight out of the 16 Transaction Comparables had their subscription price or placing price at discount to the closing price of the respective last trading date and nine out of 13 Transaction Comparables had their subscription price or placing price at discount to the average closing price during the respective last five consecutive trading days. We note that the Proposed Minimum Subscription Price has a premium of 65.2% over the closing price of the Share as at the Last Trading Date which is higher than the range of the premium/discount of the subscription price over the closing price of the hares on the last trading date of

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LETTER FROM OCTAL CAPITAL

the selected Transaction Comparables. We also note that the Proposed Minimum Subscription Price has a premium of 64.7% over the 5-day closing price, which is higher than the range of the premium/discount of the subscription price over the average closing price of the shares during the last five consecutive trading days of the Transaction Comparables.

1. from the day after the Previous Latest Practicable Date to the Latest Practicable Date

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LETTER FROM OCTAL CAPITAL

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LETTER FROM OCTAL CAPITAL

of the subscription price over the closing price of the shares on the last trading date of the selected Transaction Comparables. We also note that the Proposed Minimum Subscription Price has a premium of 53.3% over the 5-day closing price, which is higher than the range of the premium/discount of the subscription price over the average closing price of the shares during the last five consecutive trading days of the Transaction Comparables.

In order to further assess the Subscription Price against the prevailing market trends, we selected Transaction Comparables of which their respective subscriber(s) is/are connected person for our analysis.

For each of the selected Transaction Comparables identified, we compared the premium/(discounts) of its subscription price or placing price over/(to) (i) the closing price on the respective last trading date; and (ii) the average closing price for the respective last five consecutive trading days up to and including the respective last trading date, summarised in the following table:

1. in the last 6 months up to the Previous Latest Practicable Date

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LETTER FROM OCTAL CAPITAL

Source: Stock Exchange (www.hkex.com.hk)

Note:

1. The Proposed Minimum Subscription Price.
2. The expected gross proceeds attributable from the Subscription Agreements is calculated using the exchange rate of HK$1 = RMB0.88.

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LETTER FROM OCTAL CAPITAL

From the above table, we noted that five out of the 12 selected Transaction Comparables had their subscription price or placing price at discount to the closing price of the respective last trading date and six out of the 12 selected Transaction Comparables had their subscription price or placing price at discount to the average closing price during the respective last five consecutive trading days. We note that the Proposed Minimum Subscription Price has a premium of 65.2% over the closing price of the Share as at the Last Trading Date, which is higher than the range of the premium/discount of the subscription price over the closing price of the shares on the last trading date of the selected Transaction Comparables. We also note that the Proposed Minimum Subscription Price has a premium of 64.7% over the 5-day closing price, which is higher than the range of the premium/discount of the subscription price over the average closing price of the shares during the last five consecutive trading days of the selected Transaction Comparables.

1. from the day after the Previous Latest Practicable Date to the Latest Practicable Date

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LETTER FROM OCTAL CAPITAL

Source: Stock Exchange (www.hkex.com.hk)

Note:

1. The Proposed Minimum Subscription Price
2. The expected gross proceeds attributable from the Subscription Agreements is calculated using the exchange rate of HK$1 = RMB0.90

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LETTER FROM OCTAL CAPITAL

From the above table, we noted that 10 out of the 12 selected Transaction Comparables had their subscription price or placing price at discount to the closing price of the respective last trading date and the respective last five consecutive trading days. We note that the Proposed Minimum Subscription Price has a premium of 52.1% over the closing price of the Share as at the Latest Practicable Date, which is higher than the range of the premium/discount of the subscription price over the closing price of the shares on the last trading date of the selected Transaction Comparables. We also note that the Proposed Minimum Subscription Price has a premium of 53.3% over the 5-day closing price, which is higher than the range of the premium/discount of the subscription price over the average closing price of the shares during the last five consecutive trading days of the selected Transaction Comparables.

Considering that:

1. the P/E Multiples of the Company based on the Proposed Minimum Subscription Price as at the Last Trading Date and the Latest Practicable Date were both higher than the respective median of P/E Multiples of the P/E Comparables, representing a premium over the P/E Multiples of the P/E Comparables and hence a lower dilution impact on the shareholding of the Company;
2. the premium of the Proposed Minimum Subscription Price over the latest published net asset value per Share as at the Last Trading Date and the Latest Practicable Date are both higher than the respective premium/discount of the closing share price over/to the latest published net asset value per share of the Industry Comparables, representing a lower dilution impact on the shareholding of the Company;
3. the premium of the Proposed Minimum Subscription Price over the closing price of the Shares on the Last Trading Date and average closing price of the Shares during the last five consecutive trading days were both higher than the range of the premium/discount of the subscription price over the closing price of the shares on the last trading date and average closing price of the shares during the last five consecutive trading days of the Transaction Comparables;
4. the premium of the Proposed Minimum Subscription Price over the closing price of the Shares on the Last Trading Date and average closing price of the Shares during the last five consecutive trading days were both higher than the range of the premium/discount of the subscription price over the closing

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LETTER FROM OCTAL CAPITAL

• Net Asset Value

According to the 2019 Interim Report Announcement and 2018 Annual Report, the net asset value of the Group as at 30 June 2019 was approximately RMB276.5 million, while the net asset value as at 31 December 2018 was approximately RMB213.8 million. Upon Completion, the net asset value of the Company will increase as the Proposed Subscription would increase the cash balance of the Company.

• Gearing

According to the 2019 Interim Report and 2018 Annual Report, the gearing ratio of the Group as at 30 June 2019, as derived by dividing total liabilities by total assets of the Group as at 30 June 2019, was approximately 94.4%, while gearing ratio as at 31 December 2018 was 95.6%. Upon Completion and assuming the total debt of the Group would remain the same, the total assets of the Group would be increased by RMB2.3 billion as a result of the Proposed Subscription assuming a total of 2.3 billion H will be issued at the Proposed Minimum Subscription Price. Thus, the gearing level of the Group will decrease from 94.4% to 62.7% upon Completion.

Based on the above, the Proposed Subscription by Zhongdian IRICO would have an overall positive effect on the financial position of the Group in terms of cashflow, net asset value, and gearing upon Completion. Meanwhile, the Proposed Subscription by Zhongdian IRICO will not have any material impact on earnings of the Group. On such basis, we are of the view that the Proposed Subscription by Zhongdian IRICO is in the interests of the Company and the Shareholders as a whole.

4. Potential dilution effect on the shareholding of the Company

As set out in the table showing the shareholdings changes of the Company under the section headed "Possible Changes in Share Capital and Shareholding Structure" as contained in the Letter from the Board, the shareholding of the existing public Shareholders as at the Latest Practicable Date was approximately 26.85%. The Shares issued under the Proposed Subscription by Zhongdian IRICO, assuming that the number of new H Shares issuable is 900 million, represent approximately 40.32% of the existing issued share capital of the Company as at the Latest Practicable Date and 19.86% of the issued share capital of the Company as enlarged by the issue of the Shares in the Proposed Subscription by Zhongdian IRICO. As a whole, the Shares issued under the Proposed H Share Issue (including the Proposed Subscription by Zhongdian IRICO), assuming that the number of new H Shares issuable is 2.3 billion, represent (i) approximately 364.57% of the existing issued H Shares and approximately 103.03% of the existing total issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 78.47% of the enlarged issued H Shares and approximately 50.75% of the of the enlarged total issued share capital of the Company immediately upon completion of the Proposed H Share Issue. On such basis, the shareholdings of the existing

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LETTER FROM OCTAL CAPITAL

public Shareholders will be diluted from approximately 26.85% to 13.22% and the public float will be approximately 33.08%.

Having considered the reasons stated in details in the section headed "Background of and reasons for the Proposed Subscription by Zhongdian IRICO and use of proceeds" above, in particular, the following:

1. the Company has a strong need for funding to support the Four Projects in new energy business in order to continue the business transformation in progress;
2. the Proposed Subscription by Zhongdian IRICO will allow the Group to contribute funding to the Four Projects and will also allow CEC to maintain its controlling stake over the Company to lead the Company in the business transformation;

we are of the opinion that the shareholding dilution to the Independent Shareholders is acceptable so far as the Independent Shareholders are concerned.

Recommendation

After taking into account the above principal factors and reasons, we consider that the Proposed Subscription by Zhongdian IRICO was entered into on normal commercial terms and the terms of the Proposed Subscription by Zhongdian IRICO are fair and reasonable so far as the Independent Shareholders are concerned, and in the interests of the Company and Shareholders as a whole, but it is not conducted in the ordinary and usual course of business of the Company due to the nature of such transaction. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to, and we recommend the Independent Shareholders to, vote in favour of the resolution to approve the Proposed Subscription by Zhongdian IRICO.

Yours faithfully,

For and on behalf of

Octal Capital Limited

Note: Mr. Alan Fung has been a responsible officer of Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities since 2003. Mr. Fung has more than 24 years of experience in corporate finance and investment banking and has participated in and completed various advisory transactions in respect of mergers and acquisitions, connected transactions and transactions subject to the compliance to the Takeovers Code of listed companies in Hong Kong. Mr. Louis Chan has been a responsible officer of Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities since 2008. Mr. Chan has more than 16 years of experience in corporate finance and investment banking and has participated in and completed various advisory transactions in respect of mergers and acquisitions, connected transactions and transactions subject to the compliance to the Takeovers Code of listed companies in Hong Kong.

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Details of the Proposed H Share Issue are set out below:

1. CLASS AND NOMINAL VALUE OF SHARES TO BE ISSUED
   The Shares to be issued under the Proposed H Share Issue are H Shares with a nominal value of RMB1.00 per H Share.
   Except as otherwise required by the applicable laws and regulations of the PRC and the Articles of Association, the new H Shares to be issued shall rank pari passu with all the issued Domestic Shares and H Shares.
2. METHOD AND TIME OF ISSUE
   All new H Shares under the Proposed H Share Issue will be offered to target subscribers by way of non-public issuance.
   The Company shall implement the Proposed H Share Issue at an appropriate time within the validity period as approved at the EGM and the H Share Class Meeting. The Proposed H Share Issue is subject to, among other things, the approval by the CSRC and the granting of the listing approval by the Stock Exchange. The specific time of issue shall be determined by the Board as authorized by the EGM and the H Share Class Meeting, taking into account the overseas capital market conditions and the approval progress of both domestic and overseas authorities and regulatory departments.
3. SIZE OF ISSUE
   Upon grant of the specific mandate, the Company will issue not more than 2.3 billion new H Shares.
   As at the Latest Practicable Date, the existing total issued share capital of the Company is 2,232,349,400 Shares, of which 630,881,400 H Shares and 1,601,468,000 Domestic Shares are issued.
   Assuming that the number of new H Shares issuable under the Proposed H Share Issue (i.e., 2.3 billion new H Shares) are fully issued and subscribed, the number of new H Shares to be issued will represent: (i) approximately 364.57% of the existing issued H Shares and approximately 103.03% of the existing total issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 78.47% of the enlarged issued H Shares and approximately 50.75% of the enlarged total issued share capital of the Company immediately upon completion of the Proposed H Share Issue.

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Pursuant to the Subscription Agreements, each of Zhongdian IRICO, Zhangjiagang Investment, Yan'an Dingyuan and Hefei Xincheng has conditionally agreed to subscribe in cash for, and the Company has conditionally agreed to allot and issue, not more than 900 million, 500 million, 300 million and 200 million new H Shares at a consideration of RMB900 million, RMB500 million, RMB300 million and RMB200 million, respectively.

1. TARGET SUBSCRIBERS
   Upon grant of the specific mandate, the Company will proceed to place the new H Shares to not more than 10 specific investors (including Zhongdian IRICO, Zhangjiagang Investment, Yan'an Dingyuan and Hefei Xincheng).
   Save for Zhongdian IRICO, Zhangjiagang Investment, Yan'an Dingyuan and Hefei Xincheng, the other investors will be qualified institutional investors, enterprise investors and professional investors. It is intended that the target subscribers (other than Zhongdian IRICO) and their respective ultimate beneficial owners will be third parties independent of the Company and connected persons of the Company. If any of the target subscribers is or will become a connected person of the Company, the Company will take all reasonable steps to comply with the relevant requirements under Chapter 14A of the Listing Rules.
2. SUBSCRIPTION PRICE AND PRICING PRINCIPLE
   The subscription price shall be determined with reference to the market price of H Shares, the capital market conditions at the time of issue and the valuation of comparable companies, taking into account the interest of Shareholders, appetite of investors and risks of issue, and in accordance with international practices and regulatory requirements.
   The subscription price shall not be lower than 90% of the average closing price of H Shares as quoted on the Stock Exchange for the five consecutive trading days immediately preceding the price determination date (i.e., the date of signing of the relevant placing agreement). In any event, the issue price shall not be less than the latest audited net asset value per Share before the Proposed H Share Issue and the nominal value of RMB1.00 per H Share. The audited net asset value per Share as at 31 December 2018 is RMB0.096 per Share. For illustrative purposes only, the minimum issue price of new H Shares (i.e., RMB1.00 per H Share) represents a premium of approximately 52% to the closing price of H Shares as quoted on the Stock Exchange on the Latest Practicable Date (i.e., HK$0.73, equivalent to approximately RMB0.66). The exchange rate adopted for the above figures is HK$1.00 = RMB0.90. No representation is made that any amount in HK$ or RMB is or could have been or could be converted at such rate or at any other rate or at all.

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The net price to the Company of each new H Share to be issued under the Proposed H Share Issue will be determined and disclosed upon completion of the Proposed H Share Issue and the determination of the relevant expenses incurred or to be incurred in relation to the Proposed H Share Issue in accordance with the requirements of the Listing Rules.

1. METHOD OF SUBSCRIPTION
   The new H Shares shall be subscribed by investors in cash. The subscribers (including Zhongdian IRICO, Zhangjiagang Investment, Yan'an Dingyuan and Hefei Xincheng) shall pay the subscription price to the Company in accordance with the terms and conditions of the placing agreement to be entered into between the Company and the placing agent(s).
2. ARRANGEMENT RELATING TO THE ACCUMULATED UNDISTRIBUTED PROFITS PRIOR TO THE PROPOSED H SHARE ISSUE
   Upon completion of the Proposed H Share Issue, holders of the new H Shares, together with all existing Shareholders will be entitled to all undistributed profits of the Company prior to the completion of the Proposed H Share Issue.
3. VALIDITY PERIOD OF THE RESOLUTION
   The resolution in relation to the Proposed H Share Issue will be valid for 12 months from the date of passing of the resolution at the EGM and the H Share Class Meeting, unless being revoked or varied by special resolution(s) of the Shareholders in general and class meeting.
   In the event that the Board has decided to implement the Proposed H Share Issue during the validity period of the resolution, and that the Company has obtained the permission(s) and approval(s) for the issue and completed the filing or registration procedures (if applicable) with the regulatory departments during the validity period of the resolution, the Company may complete the Proposed H Share Issue during the validity period as confirmed in such permission(s), approval(s), filing(s) or registration(s).
4. AUTHORIZATION OF AMENDMENTS TO THE ARTICLES OF ASSOCIATION
   It will be proposed at the EGM and the H Share Class Meeting that the Board shall, in accordance with the framework and principles of the Proposed H Share Issue, and taking into account the final terms of the Proposed H Share Issue, amend the Articles of Association during the validity period of the resolution, and deal with the industry and commerce registration procedures in relation to the relevant changes and other matters in relation to the implementation of resolutions of the EGM and the H Share Class Meeting and the Board.

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10. OTHER AUTHORIZATIONS IN RELATION TO THE PROPOSED H SHARE ISSUE

It will be proposed at the EGM and the H Share Class Meeting that the Board shall, in accordance with the framework and principles of the Proposed H Share Issue, deal with matters pertaining to the Proposed H Share Issue at their sole discretion during the validity period of the resolution, including but not limited to:

1. signing and submitting applications, reports and other documents relating to the Proposed H Share Issue to the domestic and overseas regulatory departments or authorities, and dealing with the examination, registration, filing, checking and approval formalities;
2. determining the specific plan for the Proposed H Share Issue, including the size of issue, issue price (including price range and final price), time of issue, method of issue and target subscribers of issue; signing, executing, amending or terminating any agreements, contracts or other documents relating to the Proposed H Share Issue; making adjustments to the use of proceeds and other related matters;
3. negotiating and signing the share subscription agreements with the subscribers, or negotiating and signing the placing agreement with the placing agent(s), and approving any amendment made to the share subscription agreements or placing agreement;
4. dealing with the matters relating to the approvals of the Proposed H Share Issue from the CSRC, the Stock Exchange and/or other domestic and overseas authorities and regulatory departments;
5. recruiting and engaging the placing agent(s), domestic and overseas legal advisers and other related intermediaries for the Proposed H Share Issue, and signing the recruitment or engagement agreements or other related legal documents;
6. making appropriate amendments to the terms of the Proposed H Share Issue plan according to the actual situations of the Proposed H Share Issue and the approval documents of regulatory departments;
7. signing, executing, amending, completing all documents relating to the Proposed H Share Issue, and conducting all acts and matters as appropriate or advisable relating to the Proposed H Share Issue;
8. approving the publication of announcements, circulars and notices relating to the Proposed H Share Issue on the websites of the Stock Exchange and the Company, and submitting the relevant forms, documents or other information to the Stock Exchange;

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1. obtaining the approval from the Stock Exchange for the listing of, and permission to deal in, the new H Shares on the Main Board of the Stock Exchange; and

1. amending Article 22 of the Articles of Association in accordance with the actual results of the Proposed H Share Issue, which relates to the total number of registered capital, the total share capital and the number of classes of shares of the Company.

11. USE OF PROCEEDS

The amount of gross proceeds to be raised from the Proposed H Share Issue is expected to be not more than RMB2.3 billion. Assuming that the Company raises RMB2.3 billion in full, it intends to apply the gross proceeds for the following purposes:

1. approximately RMB500 million, representing approximately 21.7% of the gross proceeds, will be used in Yan'an Photovoltaic Glass Project. The Company proposes to invest in construction of a furnace and ancillary production lines for solar photovoltaic glass with a daily melting capacity of 800-850t/d in Baota District, Yan'an City. The annual production capacity of photovoltaic glass is expected to be 26 million square meters and the total investment amount of this project is approximately RMB750 million;
2. approximately RMB500 million, representing approximately 21.7% of the gross proceeds, will be used in Hefei Photovoltaic Glass Project (Phase II). IRICO (Hefei) Photovoltaic Co., Ltd.* (彩虹（合肥）光伏有限公司), a subsidiary of the Company, proposes to invest in construction of an oxygen-fuel combustion glass furnace with a daily melting capacity of 800-850t/d in Xinzhan District, Hefei City. The annual production capacity of tempered and coated photovoltaic glass is expected to be 24.84 million square meters and the total investment amount of this project is approximately RMB750 million;
3. approximately RMB500 million, representing approximately 21.7% of the gross proceeds, will be used in Xianyang Photovoltaic Glass Relocation and Technical Innovation Project. The small-scaled 250 tons furnaces of Xiangyang Photovoltaic are energy intensive and costly in labour cost, and three furnaces have successively come to the end of their designed life. In order to fully utilize the existing stock assets and the cost advantage of local quartz sand supply, the Company plans to relocate and newly build a photovoltaic glass furnace in Xianyang with a production volume of 800-850t/d, and equip with five photovoltaic glass sheet production lines and tempering and coating production lines of appropriate scales; after being put into production, the annual production capacity of the finished photovoltaic glass is expected to annually produce 25 million square meters and the total investment amount of this project is approximately RMB830 million;

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1. approximately RMB500 million, representing approximately 21.7% of the gross proceeds, will be used in IRICO Yongneng 2GW Photovoltaic Modules Project. Jiangsu IRICO Yongneng New Energy Company Limited* (江蘇彩虹永能新能源有限公司), a subsidiary of the Company, proposes to invest in the construction of the project in Zhangjiagang Economic Development Zone, purchase 200 sets of full-automatic production equipment and photovoltaic modules instruments and equip with the relevant power auxiliary facilities. Upon completion of this project, the annual production capacity of photovoltaic module products is expected to be 2GW and the total investment amount of this project is approximately RMB1.75 billion; and
2. approximately RMB300 million, representing approximately 13.0% of the gross proceeds, after deducting the issuance expenses, will be used to supplement the working capital of the Company.

If the actual amount of the proceeds raised from the Proposed H Share Issue (after deducting the issuance expenses) is insufficient to satisfy the proposed utilization to the projects as set out above, the shortfall shall be made up by bank loans, internal funds or other methods by the Company. Under the circumstance that the availability of proceeds from the Proposed H Share Issue is inconsistent with implementation schedule of the projects, the Company may first fund the projects by other capital according to actual situations, which shall be exchanged with the proceeds when they become available in compliance with requirements and procedures as prescribed by relevant laws and regulations.

12. CONDITIONS OF THE PROPOSED H SHARE ISSUE

The Proposed H Share Issue is subject to satisfaction of the following conditions, including but not limited to:

1. the proposed issue of new H Shares under a specific mandate having been approved at the EGM and the H Share Class Meeting, and the authorizations having been granted to the Board;
2. the competent authorities and regulatory departments, such as the CSRC and SASAC, having approved the Proposed H Share Issue pursuant to the specific mandate;

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1. the share subscription agreements (including the Subscription Agreements with each of Zhongdian IRICO, Zhangjiagang Investment, Yan'an Dingyuan and Hefei Xincheng) having been entered into between the Company and the investors or the placing agreement having been entered into between the Company and the placing agent(s), all conditions precedent under such share subscription agreements or placing agreement having been satisfied, and such share subscription agreements or placing agreement not having been terminated according to their terms; and
2. the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, all of the new H Shares to be issued and placed pursuant to the Proposed H Share Issue.

Neither the Company nor the subscribers (including Zhongdian IRICO, Zhangjiagang Investment, Yan'an Dingyuan and Hefei Xincheng) have the right to waive any of the conditions set out in sub-paragraphs (a) to (d) above. As at the Latest Practicable Date, all the conditions have been fulfilled except for the condition set out in sub-paragraph (d) above. As the validity period of the resolution in relation to the Proposed H Share Issue under the specific mandate, including the authorization to the Board to deal with matters relating to the Proposed H Share Issue, set out in sub-paragraph (a) will expire on 22 January 2020, a special resolution will be proposed at the EGM and the H Share Class Meeting, respectively, to approve the extension of such validity period.

13. SPECIFIC MANDATE TO ISSUE NEW H SHARES

The Company will convene the EGM and the H Share Class Meeting to consider and, if appropriate, to approve, among others, the Proposed H Share Issue (including the Proposed Subscription by Zhongdian IRICO) under a specific mandate.

As at the date of the Board meeting, certain Directors, namely, Mr. Si Yuncong and Mr. Fan Laiying, by virtue of their respective existing senior positions in IRICO Group, may be considered as having a material interest in the Proposed H Share Issue. As such, they have abstained from voting on the Board resolution in respect of the Proposed H Share Issue. Save as stated above, none of the other Directors have a material interest in the Proposed H Share Issue and hence no other Director has abstained from voting on such resolution.

The Directors (including the independent non-executive Directors) are of the view that the terms of the Proposed H Share Issue (including the subscription price) are on normal commercial terms and are fair and reasonable taking into consideration the prevailing market conditions and are in the interests of the Company and its Shareholders as a whole.

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1. RESPONSIBILITY STATEMENT
   This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance 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. DISCLOSURE OF INTERESTS
3. 1. Interests and Short Positions of Directors, Supervisors, Chief Executive and Senior Management
      As at the Latest Practicable Date, none of the Directors, Supervisors, chief executives or senior management members of the Company and their respective associates had any interest or short position in the shares, underlying shares and/or debentures (as the case may be) of the Company and/or any of its associated corporations (within the meaning of Part XV of the SFO) which was (a) required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including any interest and short position which any such Director, Supervisor, chief executive or member of senior management was taken or deemed to have under such provisions of the SFO); (b) required to be recorded in the register of interests required to be kept by the Company pursuant to section 352 of the SFO; or (c) otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies as set out in Appendix 10 to the Listing Rules in force as at the Latest Practicable Date.
      Mr. Si Yuncong and Mr. Fan Laiying act as Directors of the Company. Mr. Si Yuncong concurrently acts as the chairman, the secretary of the Communist Party Committee and the legal representative of IRICO Group. Mr. Fan Laiying concurrently acts as the chief accountant of IRICO Group. Mr. Ding Wenhui acts as the Supervisor and the chairman of the supervisory committee of the Company and concurrently acts as the deputy secretary of the Communist Party Committee, the deputy secretary of Discipline Inspection Committee, the chairman of Trade Union and the general counsel of IRICO Group.
      Save as disclosed above, as at the Latest Practicable Date, none of the Directors was a director or employee of a company which had an interest or short position in the shares and 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.

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1. COMPETING INTERESTS
   As at the Latest Practicable Date, none of the Directors or, so far as is known to them, any of their respective close associates (as defined in the Listing Rules) was interested in any business (apart from the Group's business) which competes or is likely to compete either directly or indirectly with the Group's business (as would be required to be disclosed under Rule 8.10 of the Listing Rules as if each of them were a controlling Shareholder).
2. INTERESTS IN THE GROUP'S ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP
   As at the Latest Practicable Date, none of the Directors or Supervisors had any 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 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 or Supervisors was materially interested in any contract or arrangement, subsisting at the date of this circular, which is significant in relation to the business of the Group.
3. CONSENT AND QUALIFICATION OF EXPERT

1. The following is the qualification of the expert who has given an opinion or advice which is contained in this circular:

1. As at the Latest Practicable Date, the above expert did not have any shareholding directly or indirectly in any member of the Group or any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group and it had no interest, either directly or indirectly, in any assets which have been, since the date to which the latest published audited financial statements 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.

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1. 1. On the Latest Practicable Date, the above expert has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its report and reference to its name and letter, where applicable, in the form and context in which it appears.
2. SERVICE CONTRACTS
   As at the Latest Practicable Date, none of the Directors or Supervisors had any existing or proposed service contract with any member of the Group (excluding contracts expiring or terminable by the employer within a year without payment of any compensation (other than statutory compensation)).
3. MATERIAL ADVERSE CHANGE
   As 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, the date to which the latest published audited consolidated financial statements of the Group were made up.
4. DOCUMENTS FOR INSPECTION
   Copies of the following documents will be available for inspection during normal business hours at the Company's principal place of business in Hong Kong at Units 1607-8, 16/F, Citicorp Centre, 18 Whitfield Road, Causeway Bay, Hong Kong for a period of 14 days (excluding Saturdays and public holidays) from the date of this circular:
5. 1. the Subscription Agreement with Zhongdian IRICO;
   2. the Subscription Agreement with Zhangjiagang Investment;
   3. the Subscription Agreement with Yan'an Dingyuan; and
   4. the Subscription Agreement with Hefei Xincheng.

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