The Largest Non-state Owned Construction Contracting Company in the Beijing-Tianjin-Hebei Region Announces Proposed Listing on the Main Board of SEHK

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Offer price between HK$4.46 and HK$5.36 per share for net proceeds approximates HK$2,037.2 million

HONG KONG — Hebei Construction Group Corporation Limited (“Hebei Construction” or the “Company”; stock code: 1727.HK), a leading non-state owned construction group in China, announced the proposed listing of its shares on the Main Board of The Stock Exchange of Hong Kong Limited (“SEHK”) on 4 December 2017.

Hebei Construction plans to offer an aggregate of 433,334,000 H shares (subject to the over-allotment option), consisting of 390,000,000 international offer shares (subject to adjustment and the over-allotment option) and 43,334,000 Hong Kong offer shares (subject to adjustment), at a price range between HK$4.46 and HK$5.36 per share.

The public offering opened at 9:00 a.m. on Tuesday, 5 December 2017 and close at noon on Friday, 8 December 2017 in Hong Kong. Dealings in shares on HKEx are expected to commence on Friday, 15 December 2017, with the stock code 1727.HK in board lots of 500 shares each.

China International Capital Corporation Hong Kong Securities Limited and CMB International Capital Limited are the joint sponsors, joint global coordinators, joint bookrunners and joint lead managers.

The largest non-state owned construction contracting company in the Beijing-Tianjin-Hebei Region and the second largest non-state owned construction contracting company in China
Founded in 1952, Hebei Construction Group Corporation Limited is a leading non-state owned construction group in China, providing construction contracting services mainly as a general contractor for building construction projects and infrastructure construction projects, and the Company also engages in property development, property management and other businesses.

In terms of revenue in 2016, the Company was the largest non-state owned construction company in the Beijing-Tianjin-Hebei Region and the second largest non-state owned construction company in China. The Company experienced fast growth during the track record period. The total revenue increased from RMB24,859.1 million in 2014 to RMB38,609.4 million in 2016, representing a CAGR of 24.6% from 2014 to 2016. The profit for the year increased from RMB351.3 million in 2014 to RMB813.6 million in 2016, representing a CAGR of 52.2% from 2014 to 2016. The net profit from continuing operations increased by 44.0% from RMB328.5 million in the six months ended June 30, 2016 to RMB472.9 million in the same period in 2017.

With a broad range of qualifications and a growing and optimizing business mix, Hebei Construction is well-recognized in the industry for outstanding performance in construction quality

Hebei Construction is well-recognized in the industry for its outstanding performance in construction quality, safety and innovation. The company has won 18 Lu Ban Awards, the highest and most prestigious award given by the MOHURD for construction quality excellence. In terms of the number of Lu Ban Awards won from 2011 to 2016, the Company ranked first among all construction companies in Hebei Province. The company has won three Tien-yow Jeme Civil Engineering Prize, the highest and most prestigious award given by the China Civil Engineering Society in the civil engineer industry. Hebei Construction is also the only construction company in Hebei Province that has won the National Quality Award, the highest and most prestigious award for quality management.

In addition, with a broad range of qualifications and a growing and optimizing business mix, Hebei Construction continued to win mandates for high-quality projects. The construction contracting industry in China is highly regulated. The Company has a broad range of qualifications in the construction contracting industry, covering the majority of construction categories. As of June 30, 2017, the Company’s construction contracting qualifications include one premium grade qualification, 19 first grade qualifications, 12 second grade qualifications and seven third grade qualifications. These qualifications cover seven out of the 12 types of general contracting qualifications, and 17 out of the 36 types of specialized contracting qualifications in the construction contracting industry. With a broad range of qualifications, the Company is able to bid for and undertake an expansive portfolio of projects, covering residential, public, industrial and commercial buildings, municipal and transportation infrastructure as well as specialized construction areas. The Company’s profit margin continues to rise with the continued optimization of the Company’s business mix.

Hebei Construction’s success in establishing long-term and strong relationships with customers has been in large part due to its strong track record of providing high-quality, timely and safe construction contracting services. From 2014 to 2016, the new contract value increased from RMB35,335.9 million to RMB48,260.5 million, representing a CAGR of 16.9%. The new contract value for the first six months in 2017 reached RMB39,561.5 million.

Well-positioned to benefit from the PRC national strategies of coordinated development of the Beijing-Tianjin-Hebei Region and the establishment of the Xiong’an New Area

Home to over 100 million people and contributing over one-tenth of China’s GDP in 2016, the Beijing-Tianjin-Hebei Region is one of the key engines of China’s economic growth. The PRC government further promoted the coordinated development of the Beijing-Tianjin-Hebei Region as a national strategy in 2014, and Baoding designated as one of the core cities, so as to promote the development of infrastructure. Hebei Province has planned to invest approximately RMB100 billion to upgrade its transportation infrastructure in 2017. In the meantime, the coordinated development of the Beijing-Tianjin-Hebei Region is expected to accelerate the region’s urbanization and population mobility, which is expected to effectively promote the development of the building construction and infrastructure construction in this region.

Moreover, the PRC government has announced in April 2017 to create the Xiong’an New Area as one of the key steps of the coordinated development of Beijing-Tianjin-Hebei Region. The counties of Xiong’an New Area are all affiliated to Baoding. The establishment of the Xiong’an New Area is anticipated to play an important role in the migration of the “non-capital functions” of Beijing. This development is expected to bring significant investments in infrastructure and building construction sectors in this region, and the fixed-assets investment in the Xiong’an New Area is estimated to exceed RMB400 billion in the next five years.

As the largest non-state owned construction company in the Beijing-Tianjin-Hebei Region, which is headquartered in Baoding, the Company’s long history of development in this region and resourceful customer relations have contributed to its unique geographical advantage. During the Track Record Period, the Company has established a valuable strategic cooperation relationship with local governments and completed several construction projects in this area. In the meantime, Hebei Construction has partnered with local government in the Xiong’an New Area to set up three joint ventures with the aim to undertake infrastructure construction projects in this region, which gives the Company the first-mover advantages to benefit from the opportunities brought by the establishment of the Xiong’an New Area.

Mr. Li Baozhong, Chairman and Executive Director of Hebei Construction Group Corporation Limited said, “Looking ahead, our goal is to continue to capture greater market share in the Beijing-Tianjin-Hebei Region and elsewhere in China to further reinforce our leading position in the construction contracting industry. The Company will seize the opportunities brought by the national strategies of coordinated development of the Beijing-Tianjin-Hebei Region and establishment of the Xiong’an New Area. We will continue to optimize our qualification portfolio and expand our business network to further improve the nationwide market share, as well as to improve the business mix to further enhance our profitability. We aim to expand our business to the provision of municipal services, and become a leading integrated construction service provider and municipal service provider.”

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