Investment Highlights- In terms of approved capacity of owned and managed utility-scale ground-mounted solar farm projects in operation, Xinyi Energy is a leading non-State owned solar farm owner and operator in the PRC. All of these solar farm projects are strategically located in Anhui, Henan, Hubei and Fujian Provinces and Tianjin Municipality, in the PRC, with low curtailment risks. The solar farm projects are relatively new and enjoy long asset life and generate stable revenue by selling electricity to local subsidiaries of the State Grid under the Feed-in-Tariff regime- Aggregate approved capacity of its Initial Portfolio is 954 MW from a total of nine utility-scale ground-mounted solar farm projects. Xinyi Energy will acquire a total of six utility-scale ground-mounted solar farm projects under the Target Portfolio with an approved capacity of 540 MW upon Listing. Shortly after the Listing, Xinyi Energy will own and operate 15 utility-scale ground-mounted solar projects in the total approved capacity of 1,494 MW- Xinyi Energy will adopt a high dividend payout policy after listing of not less than 90% of distributable income each year, with an intent to distribute 100% of that income in respect of each year. The final dividend for the year 2018 is expected to represent 50% of the total amount of its distributable income for the year. In 2019 and 2020, Xinyi Energy intends to declare and distribute interim and final dividend representing 100% of its distributable income- As a member of Xinyi Group, Xinyi Energy's management possesses extensive management and operation experience with listed companies to enhance operations efficiency, lower operating costs and maintenance expenses. Moreover, Xinyi Energy continue to be a non-wholly owned subsidiary of Xinyi Solar after Listing, so it will have a call option (Solar Farm Call Option) and the right of first refusal of the solar farm (Solar Farm ROFR) over the utility-scale ground-mounted construction completed and grid connected solar farm projects constructed or developed by Xinyi Solar. This together with the proven track record in solar farm development of Xinyi Solar will effectively support Xinyi Energy's future business growth and dividend growth- The PRC is the largest and fastest growing solar energy market in the world, and is expected to continue to lead the global market in terms of annual solar power installation and capital investment in solar farm projects between 2017 and 2020. In 2017, the PRC led the world as the largest solar power installation market for the fifth consecutive year, installing 53.1 GW of new solar power, and accounting for 53% of the solar power capacity installed globally during the year, demonstrating the tremendous market development potential

Offering DetailsXinyi Energy intends to offer an aggregate of 1,880,077,547 shares (the "Offer Share") by way of the Global Offering (subject to the re-allocation and over-allotment option), of which 90% will be for International Offering (subject to over-allocation option and the re-allocation) and the remaining 10% will be for the Hong Kong Public Offering (subject to re-allocation). Out of the Offer Shares for the International Offering, 765,967,547 Offer Shares will be offered to shareholders to Xinyi Solar on an assured basis. Xinyi Glass (stock code: 868.HK), as a shareholder of Xinyi Solar, has indicated that it will participate in the assured offering pro rata to its assured entitlement and may apply for excess Offer Shares under assured offering. The indicative offer price (the "Offer Price") range is between HK$1.89 and HK$2.42 per Offer Share. After deducting underwriting fees and estimated expenses, assuming an Offer Price of HK$2.155 (being the mid-point of the indicative range of the Offer Price) and that the over-allotment option is not exercised, net proceeds from the Global Offering are estimated to be approximately HK$3,910 million.

The Hong Kong Public Offer will commence at 9:00 a.m. on 10 December 2018 (Monday) and end at 12:00 noon on 13 December 2018 (Thursday). The final offer price and the allotment results will be announced on 20 December 2018 (Thursday). Trading in the shares is expected to commence on the Main Board of the SEHK on 21 December 2018 (Friday) under the stock code 3868. The shares will be traded in board lots of 2,000 shares each.

BNP Paribas Securities (Asia) Limited is the Sole Sponsor, Sole Global Coordinator, Joint Bookrunner and Joint Lead Manager of the Global Offering. BOCI Asia Limited, DBS Asia Capital Limited and The Hongkong and Shanghai Banking Corporation Limited are Joint Bookrunners and Joint Lead Managers.

Investment HighlightsXinyi Energy is a leading non-State owned solar farm owner and operator in the PRC with a high dividend payout ratio Xinyi Energy is a leading non-State owned solar farm owner and operator in the PRC in terms of approved capacity of the utility-scale ground-mounted solar farm projects in operation owned and managed by Xinyi Energy. It owns and operates utility-scale ground-mounted solar farm projects initially developed and constructed by Xinyi Solar. Aggregate approved capacity of Xinyi Energy's Initial Portfolio is 954 MW in a total of nine projects. Pursuant to the Target Sale and Purchase Agreement, Xinyi Energy will acquire a total of six utility-scale ground-mounted solar farm projects under the Target Portfolio with an approved capacity of 540 MW upon Listing. Its operation scale will increase to 1,494 MW over a total of 15 projects, bringing growth momentum to Xinyi Energy.

Xinyi Energy will adopt a high dividend payout policy after listing planning distributions in each year of not less than 90% of distributable income, with an intent to distribute 100% of its distributable income annually. The final dividend ending the financial year 2018 is expected to represent 50% of its total distributable income for the year. During the two years ending financial year 2020, it expects to declare and distribute interim and final dividends representing 100% of its distributable income. Unlike other solar farm business operators, Xinyi Energy is not engaged in solar farm development and construction businesses and hence is not directly affected by any policies regulating construction of new solar farm in the PRC. During the track record period, Xinyi Energy's revenue generated from the sale of electricity grew from HK$313.0 million in 2015 to HK$1,116.0 million in 2017. The revenue generated from the solar farm projects under its Initial Portfolio amounted to HK$605 million for the six months ended 30 June 2018, as compared with HK$586 million for the six months ended 30 June 2017.

According to the SgurrEnergy Report, in terms of accumulated grid-connected utility-scale approved capacity as of 31 December 2017, Xinyi Solar, Xinyi Energy's parent company, ranked sixth in the solar farm development industry in the PRC amongst the non-state owned solar farm operators in the PRC with a total approved capacity of 1,754 MW. Xinyi Energy will continue to be a non-wholly owned subsidiary of Xinyi Solar after listing, so it will have a call option and the right of Solar Farm ROFR owned by Xinyi Solar. Xinyi Solar's proven track record in solar farm development, its industry leadership and approved capacity scale are beneficial to and effectively support Xinyi Energy's future business and dividend growth.

Solar farm projects with predictable performance, expected long asset life and low risks as well as investment return certainty supported by the Feed-in-Tariff regimeXinyi Energy's solar farm portfolio consists of grid-connected utility-scale ground-mounted solar farm projects currently generating revenue and using proven, reliable and effective technologies. All solar farm projects under both its Initial Portfolio and Target Portfolio are strategically located in Anhui, Henan, Hubei and Fujian Provinces as well as Tianjin Municipality in the PRC. Due to the growth in the domestic and industrial electricity demand and solar irradiation variation across one year typically within a range of 2% to 3% from the average, the projects have low curtailment risks and long asset life. Xinyi Energy can sell electricity to local subsidiaries of the State Grid with low counterparty risks, and thereby generate stable revenue for Xinyi Energy. All of the utility-scale ground-mounted solar farm projects under its Initial Portfolio have been in full business operation within the past four years and their approved capacity has remained unchanged. Solar farms typically require lower operational cost and maintenance expenses as compared to that of conventional energy sources. As the solar farm projects in the portfolio are relatively newly constructed, the maintenance expenditure associated with replacement of parts is not significant, so it faces no risk of fuel cost fluctuation.

Under the Feed-in-Tariff regime, utility-scale ground-mounted solar farm projects constructed under the national quota system in the PRC are in principle entitled to receive that tariff at the same applicable rate for 20 years on the electricity generated after the solar farm projects are grid-connected. The utility-scale ground mounted solar farm projects under its Initial Portfolio, which are constructed under the national quota system in the PRC, are in principle entitled to receive the Feed-in-Tariff at the same applicable rate for an average remaining duration of 17 years. Those eligible solar farm projects are listed in the Subsidy Catalogue, which is a prerequisite for the receipt of the tariff adjustment. In addition, pursuant to the power purchase agreements, the State Grid shall purchase all electricity generated from Xinyi Energy's solar farms projects. The National Development and Reform Commission (NDRC) released a utilization hour protection policy in May 2016, which provides a guaranteed level of off-take hours for solar farm projects. The shortfall would be compensated by the State Grid in the full amount, so the Initial Portfolio will generate a stable and predictable return for Xinyi Energy.

The PRC is the world's largest and the fastest growing solar power market with the favourable PRC government policies on the renewable energy sector, creating ample room for growth to Xinyi EnergySolar power installation has rapidly increased around the world. The cumulative solar power capacity in the PRC grew from 2.1 GW in 2011 to 130.3 GW by the end of 2017, demonstrating its strong potential with a CAGR of 80.3%. In 2017, the PRC led the world as the largest solar power installation market for the fifth consecutive year, with a new solar power installation capacity of 53.1 GW, and accounted for 53% of the globally installed solar power capacity during the year. The PRC is expected to continue to lead the global market in terms of annual demand for solar power installation and capital investment in solar farm projects between 2017 and 2020. As part of the 13th Five-Year Plan, the National Energy Administrative (NEA) further increased the targeted solar power capacity to 105GW by the end of 2020. The level of solar power use in the PRC is significantly lower than that of the other developed solar power markets, which reflects unlimited potential for the development of solar power markets in the PRC, thus creating huge room for the future growth of Xinyi Energy.

The PRC Government has implemented a series of favorable policies to support and encourage the development of the renewable energy industry since 2009, such as favorable tax rates, protective purchases in full amount, grid connection and top priority in grid connection, protection of utilization hours, subsidized Feed-in-Tariff and raising the target of solar power capacity, in order to facilitate the sustainable development of the solar power industry. On 31 May 2018, the NDRC, Ministry of Finance, and the NEA jointly promulgated the Notice on Matters Concerning Photovoltaic Energy in 2018, which mainly covered the development and construction of new ground-mounted solar farm projects. Xinyi Energy is primarily focused on the solar farm operation and management business and will not be involved in the development and construction of solar farm projects. Therefore, the policy would have no impact on the solar farm projects currently owned and managed by Xinyi Energy and the solar farm projects in the Target Portfolio, nor it will change the tariff adjustment received by existing solar farm projects. All solar farm projects of Xinyi Solar in the pipeline or which Xinyi Energy may acquire, are being constructed and completed under the national quota system in the PRC and will be entitled to the Feed-in-Tariff at the applicable rates upon connection to the grid for a period of 20 years. Thus this new policy will not affect Xinyi Energy, but serves to highlight its competitive edge and capabilities as a solar farm operator.

Professional management team and all-round development strategy support Xinyi Energy's future business growth As a member of the Xinyi Group, Xinyi Energy's professional management team has abundant experience in management and operation of listed companies, as well as experience and expertise in the solar power industry in the PRC, with the knowledge of the solar power regulatory regime in the PRC and the latest development of the solar power industry, which enables Xinyi Energy to take advantage of market opportunities, manage and assess risks and formulate business development strategies. In addition, Xinyi Energy has strived to enhance operational efficiency and reduce operational and maintenance costs, so as to increase overall distributions to shareholders and maximize shareholder value.

Future StrategiesLooking ahead, Xinyi Energy will endeavor to maintain and strengthen its position as a leading non-state owned solar farm owner and operator in the PRC. It intends to grow its business and distributions by way of acquisition of long-term contracted solar farm projects. In order to have higher returns and to lower the risk profile, Xinyi Energy will acquire solar farms from independent third parties, focusing on acquiring large-scale solar farm assets that are relatively newly constructed under the national quota system in the PRC or with long-term contracted power purchase agreements entered with creditworthy counterparties, using proven technology and with predictable operating performance, low operating risk, and low maintenance cost. Regarding acquisitions, Xinyi Energy will first use external debt financing to gain higher returns and reduce related risks. Xinyi Energy also plans to further diversify its project portfolio. Leveraging its business track record, expertise and market experience to enter other provinces in the PRC and consolidate its leading presence in the industry. While expanding its business map, it will focus on areas with healthy demand and supply conditions and which face no over-capacity or curtailment issues. At the same time, to expand its solar farm business, Xinyi Energy will also monitor mature and emerging markets overseas with favorable investment attributes when such opportunities arises. In addition, other renewable technologies and the capability of operating renewable energy generation assets will be considered when evaluating acquisition and partnerships opportunities aimed at facilitating its project mix to achieve diverse growth. Xinyi Energy will closely monitor renewable energy trends and develop relevant capabilities, with the hope to bolster its internal capabilities, or enhance its overall competitiveness through establishment of strategic partnerships with different industry players. To ensure that it has sufficient financial resources to tap acquisition opportunities in the future, Xinyi Energy will maintain a prudent capital structure and sound financial practices, seeking for longer-term debt financing and diversify its debt maturity profile. It also intends to maintain a distribution policy that can provide shareholders with dividends which are stable and sustain growing in the long-term.

Financial HighlightsFor the Year Ended 31 Dec For the Six Months Ended 30 Jun2015 2016 2017 CAGR 2017 2018 ChangeHK$'000 HK$'000 HK$'000 % HK$'000 HK$'000 %Revenue 313,030 968,291 1,116,044 88.82 585,652 604,549 3.23Gross Profit 225,584 719,804 827,798 91.56 446,820 447,689 0.20Profit Attributable to Equity Holders of the Company 256,088 659,005 719,639 67.63 391,679 363,651 -7.16Adjusted EBITDA 293,456 922,132 1,053,888 89.51 559,946 552,376 -1.35Distributable Income 163,708 499,756 594,368 90.54 313,516 314,428 0.29

Use of ProceedsAssuming the Offer Price is HK$2.155 per Offer Share (being the mid-point of the indicative range of the Offer Price) and that the Over-allotment Option is not exercised, net proceeds of HK$3.91 billion are expected to be raised after deducting the underwriting commissions and estimated expenses, and will be used as below:

Items / Approx. %For the payment of the Agreed Purchase Price, of which an upfront payment of 50.0% will be settled upon completion of the Target Acquisition and the remaining balance, being the Outstanding Amount, will be settled on the earlier of (a) the fourth anniversary of the Listing Date and (b) by installments following the receipt of the tariff adjustment receivables relating to the solar farm projects under the Target Portfolio pursuant to the Target Sale and Purchase Agreement: 90.0For its working capital and loan refinancing for the purpose of reducing its interest expense: 10.0

About Xinyi Energy Holdings Limited

Xinyi Energy is a leading non-State owned solar farm owner and operator in the PRC, owning and operating utility-scale ground-mounted solar farm projects, using proven, reliable and efficient technologies. All of Xinyi Energy's solar farm projects are strategically located in Anhui Province, Tianjin Municipality, Fujian Province, and Hubei Province with low curtailment risk and long asset life, generating stable revenue by selling electricity to local subsidiaries of the State Grid. The aggregate approved capacity of Xinyi Energy's Initial Portfolio is 954 MW (a total of 9 projects). Pursuant to the Target Sale and Purchase Agreement, Xinyi Energy will acquire the utility-scale ground-mounted solar farm projects under the Target Portfolio with an approved capacity of 540 MW upon the Listing (a total of 6 projects). The total approved capacity of Xinyi Energy's solar farm projects will reach 1,494 MW (a total of 15 projects) upon the Listing. Xinyi Energy intends to adopt a high dividend payout policy which declare and distribute interim and final distributions in each year of not less than 90% of the distributable Income, with intent to distribute 100% of the distributable Income in respect of each year.

Media EnquiresStrategic Financial Relations LimitedIris LEE Tel: (852) 2864 4829 Email: [email protected] Katrina LEUNG Tel: (852) 2864 4857 Email: [email protected]Website: www.sprg.com.hk^[1][2][3]

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References

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