Our Infrastructure Leasing business comprises:

1. Transportation infrastructure leasing (toll roads, rail transit);

2. Urban infrastructure leasing (municipal facilities, affordable housing);

3. Energy infrastructure leasing (energy and electric power equipment).

We operate our Infrastructure Leasing business on a nationwide basis in the PRC and manage our Infrastructure Leasing business by geographical regions. Since CDB became our Controlling Shareholder in 2008, by leveraging our brand name and capabilities, we have established good cooperative relationships with local governments, a stable customer base and an effective business model. CDB is the largest bank for infrastructure financing in the PRC. We actively collaborate with CDB’s regional branches in our Infrastructure Leasing business and thereby benefiting from CDB’s strong support in customer development, project information management, risk management and account monitoring.

Our Infrastructure Leasing business is mostly under finance leases and is primarily conducted through sale-and-leaseback transactions. For Infrastructure Leasing business, we generally require that a leased asset or lessee has a stable cash flow sufficient to cover lease payments and other debt repayment obligations, and such cash flow may include funds that the lessee expects to receive in government procurement. Our lease contracts are generally priced based on a floating interest rate, which is set at a predetermined spread over the PBOC benchmark loan interest rate of the same period.

Our Infrastructure Leasing customers are mainly large state-owned enterprises that operate transportation, urban and energy infrastructure.

Our infrastructure leasing services have the following features:

1. We provide financing to our customers through the sale and leaseback of completed infrastructure assets;

2. We generally provide greater flexibility on the use of the funds that we provide to our customers;

3. Our finance leases are long-term and generally range from 5 to 15 years;

4. A considerable portion of our leased assets are well developed and generating stable cash flow;

5. Certain funds that constitute the source of lease payments have been included in the fiscal budgets of local governments as the relevant projects are closely related to public welfare.

As a result of the foregoing, our infrastructure leasing services are capable of meeting customer demand where commercial bank loans are not an ideal option for our customers. At the same time, our infrastructure leasing services provide us with a stable and predictable source of income. We have effectively mitigated uncertainties associated with infrastructure construction and managed the credit risks associated with the Infrastructure Leasing business, and there were no non-performing assets in our Infrastructure Leasing business during 2013 to 2015. Our collaboration with CDB in providing infrastructure leasing services also facilitates CDB’s fulfillment of its promise of “comprehensive financial services” to its customers and enhances customer loyalty.

1. Transportation Infrastructure Leasing

Our transportation infrastructure leasing business primarily comprises the leasing of toll roads and rail transit equipment.

1.Toll Roads

We commenced our toll road leasing business in 2003. According to Frost & Sullivan, we were the first CBRC-regulated leasing company in the PRC to provide toll road leasing services and a leading toll road leasing company in the PRC.The main business model of toll road leasing relies on the leasing of highways, toll roads and bridges (including ancillary facilities and excluding the underlying land) that have a steady cash flow in the form of toll revenue. We typically require the lessee to pledge the toll-collecting rights as a security to us. The lease term of toll road projects is capped by toll-collecting period and generally ranges from 7 to 12 years.

2.Rail Transit

We commenced our rail transit leasing business in 2007, and according to Frost & Sullivan, we were the first CBRC-regulated company in the PRC to provide such services.

The main business model of rail transit leasing is the sale-and-leaseback of fixed assets, such as rail equipment and ancillary facilities. Rail transit leases are serviced by government fiscal support, tickets, advertising, real estate rental incomes and other rail transit management-related income. The lease term of our rail transit leasing projects generally ranges from 5 to 15 years.

2. Urban Infrastructure Leasing

Our urban infrastructure leasing business primarily comprises the leasing of municipal facilities and affordable housing.

1. Municipal Facilities

We are one of the leading companies in providing municipal facilities leasing services in the PRC. We conduct our municipal facilities leasing business primarily through sale-and leaseback transactions. Our municipal facilities leases are serviced mainly by revenues from the operation of municipal facilities. We also require the lessees to pledge the collecting rights of receivables in government procurement as a security to us, and/or require companies owned or controlled by the government to provide joint liability guarantee. The lease term of our municipal facilities projects generally ranges from 5 to 13 years.

2.Affordable Housing

The development of affordable housing has been a policy priority of the PRC government. We commenced our affordable housing leasing business in 2011. We carry out our affordable housing leasing business primarily through sale-and-leaseback transactions. Affordable housing leases are serviced mainly by rents and government fiscal support. To mitigate credit risk, we usually enter into repurchase agreements with the local governments where the lessees are located, under which the local governments agree to repurchase our leased affordable housing in the event of default. The leasing term of our affordable housing projects generally ranges from 6 to 15 years.

3. Energy Infrastructure Leasing

Building on our experience in providing equipment leasing services to traditional power enterprises in China, in recent years, we have increased our presence in providing leasing services to clean energy enterprises with good growth potential, which is in line with the national policy of energy structure optimization of the PRC.

We conduct our energy and electric power equipment leasing business primarily through sale-and-leaseback transactions. Electric power equipment leases are serviced mainly by revenues from electricity fees. We typically require lessees to pledge electricity fee collecting rights as security to us. The lease term of our energy infrastructure projects generally ranges from 5 to 15 years.