Guangzhou Investment to Acquire Guangzhou Construction Holdings from Yue Xiu Enterprises

Guangzhou Investment to Acquire Guangzhou Construction Holdings & other Property Assets from Yue Xiu Enterprises

Guangzhou Investment ("GZI") announced the acquisition of Guangzhou Construction and some other property assets in Guangzhou for HK$ 5.0 billion from holding company Yue Xiu Enterprise. This price represents a 40% discount to their total net asset value of HK$ 8.35 billion.

These HK$ 8.35 billion property assets to be acquired by GZI is consisted of firstly, 100% City Construction Holding BVI (HK$6.35 billion) injected to Yue Xiu Enterprise by Guangzhou City Government. And secondly, 49% stake in Supergain Ltd. (HK$2.0 bn) held by Yue Xiu Enterprise.

Guangzhou Construction is the biggest and most reputable property developer in Guangzhou. It is also one of the best 100 property developers in China with net profit after tax in the first half of 2001 amounted to Rmb 114 million. Supergain Ltd. is a join venture between GZI and Yue Xiu Enterprise for development of Guangzhou property projects.

GZI will pay HK$ 2.0 billion in cash, issue to Yue Xiu Enterprise 2.15 billion new shares at HK$ 0.68 each, and sell to Yue Xiu Enterprise cement and hi-tech projects worth HK$ 1.55 billion. On completion, Yue Xiu Enterprise s shareholding in GZI will be increased from 43.8% to 63.5%. GZI s net gearing ratio will increase moderately from 29% to 36%.

The biggest benefit GZI can derive from this transaction is its attributable land bank will increase significantly from 200,000 square meters to 4.2 million square meters. Attributable property under development, held for sale and rental properties will also increase from 370,000 square meters to 1.67 million square meters, making GZI the single largest developer in Guangzhou and amongst red chip property companies in Hong Kong.

With the acquisition of Guangzhou Construction by GZI, the former s management team will join the Broad of GZI and be responsible for managing all the property projects. This transaction, which is expected to complete in the first quarter of 2002, will combine the strength of two companies and create one of the strongest property development groups in China.

Full copy of the above announcement is available at the Hong Kong Stock Exchange s website www.hkex.com.hk. The listed company code for GZI is 123.

Contact: Sophia Yan, Executive Director of Guangzhou Investment Co. Ltd.
(Tel: 2116 8022 ; Fax: 2598 7688 ; email: contact@gzinvestment.com.hk)