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Boosting NAV, Narrowing stock discount to NAV, and Strengthening corporate governance 1 July 2006 Disclaimers on final page. Organisation chart. City Govt. Public. 44.06%. 55.94%. SHENZHEN INVESTMENT ( 0604.HK ). 24.3%. 31.1%. 19%. 80%. Transport. Industrial SEG Color Display

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slide1

Boosting NAV,Narrowing stock discount to NAV, andStrengthening corporate governance1 July 2006Disclaimers on final page

organisation chart
Organisation chart

City Govt

Public

44.06%

55.94%

SHENZHEN INVESTMENT (0604.HK)

24.3%

31.1%

19%

80%

Transport

  • Industrial
  • SEG Color Display
  • PJLD products /LCD/Steel

Mawan

Power

  • Property developers
  • Pengji: 100% stake
  • Branch Co: 100%
  • Terra: 51%
  • Logistics: 51%

Road King

Cable

TV

Investment

property

SHENZHEN INVESTMENT

five tasks in 2006 07
Five tasks in 2006-07
  • Selling non-core assets;
  • Providing total transparency;
  • Raising NAV (more land, faster property development, higher profit);
  • Acquiring property developers (M&As);
  • Above all, introducing performance-based incentives system

SHENZHEN INVESTMENT

three goals
Three goals
  • To become a quality property developer and infrastructure operator;
  • Raising ROE from 12.6% seen in 2005 to about 20% by 2008;
  • Rising dividend: >50%

SHENZHEN INVESTMENT

our good raw materials
Our good “raw materials”
  • 3.3m sqm of landbank + projects under construction;
  • Ability to acquire more land cheaply;
  • Ability to develop land efficiently (a large pool of talents);
  • SOE status is not without advantages;
  • Road King is in the harvest season; and
  • Cheap valuation (see next page)

SHENZHEN INVESTMENT

modest valuation
Modest valuation
  • PER: 8x 2005 EPS;
  • EV/EBITDA: <4X 2005;
  • Free cash flow yield: 19% (in 2005);
  • Discount to market NAV: > 50%;
  • Vast potential to grow NAV

SHENZHEN INVESTMENT

our competitiveness
Our competitiveness
  • Senior personnel are experienced and motivated;
  • Our SOE status gives regional regulators extra comfort – essential for our expansion
  • The sector is very fragmented, giving us space to grow

SHENZHEN INVESTMENT

2005 results vs 2004
2005 results vs. 2004

SHENZHEN INVESTMENT

road king s financials
Road King’s financials

SHENZHEN INVESTMENT

road king performance
Road King Performance

SHENZHEN INVESTMENT

our bullish views on road king
Our bullish views on Road King
  • Diverse portfolio: 21 roads in 8 provinces;
  • Operating leverage (roads in hinterland);
  • Probably the cheapest toll-road operator;
  • A 4.5% dividend yield & low gearing;
  • Land bank: 1.6m sqm of GFA;
  • One-off expenses in 2005: finance charges; development costs, and losses in Canada (close to HK$100m);
  • Property sales in 2006-08

SHENZHEN INVESTMENT

disclaimers
Disclaimers
  • This presentation is prepared in good faith, based on audited financial data, publicly available information, and management’s outlook as of today. Macroeconomic parameters could change unexpectedly. The company’s operating environment and thus strategies could change as a result and without notice.
  • This presentation does not constitute an invitation to trade this or any other stock. Stocks can go down as well as up. Historical performance is no guarantee for the future.
  • The company has announced that it is in the process of selling some non-core assets. However, the NAV estimates made in this document are for reference only, and have nothing to do with our views of potential realizable values. Indeed, the disposals may or may not materialize.

SHENZHEN INVESTMENT

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