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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934

For the month of: March, 2009

NAM TAI ELECTRONICS, INC.

(Translation of registrant’s name into English)

Unit C, 17 Floor Edificio Comercial Rodrigues
599 da Avenida da,
Praia Grande, Macao
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F þ Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes o No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-                    .

 

 

Explanatory Note

The following are furnished with this Report on Form 6-K:

•

Press Release of March 17, 2009 announcing the despatch of registrant’s Composite Offer Document seeking to Privatize Nam Tai Electronic & Electrical Products Limited (“NTEEP”), with Joint Announcement dated March 16, 2009 attached thereto;

•

Composite Offer Document Relating To Proposed Privatization of NTEEP by registrant

•

Press Release of March 13, 2009 announcing the filing of registrant’s Annual Report on Form 20-F with the Securities and Exchange Commission and the schedule for registrant’s Annual Meeting of Shareholders

		NEWS RELEASE

Investor Contact: Anthony Chan Unit A, 17/F, Edificio Comercial Rodrigues, 599 da Avenida da Praia Grande, Macao, PRC TEL : (853) 2835 6333 / FAX : (853) 2835 6262		Email: shareholder@namtai.com Website: www.namtai.com

Composite Offer Document Despatched in Hong Kong
regarding the Proposed Offer to Privatize NTEEP

Macao, PRC — March 17, 2009 — Nam Tai Electronics, Inc. (“Nam Tai” or the “Company”) (NYSE Symbol: NTE) announced that on March 17, 2009, the Company and Nam Tai Electronic & Electrical Products Limited (“NTEEP”), Nam Tai’s 74.88%-owned Hong Kong Stock Exchange-listed subsidiary (Stock Code: 2633), jointly announced the issuance to the independent shareholders of NTEEP of Nam Tai’s formal conditional cash offer (called a Composite Offer Document) under Hong Kong’s securities law and the rules of the Hong Kong Stock Exchange to purchase for US$0.19 (i.e. HK$1.50) per share the shares of NTEEP that Nam Tai does not already own. Nam Tai’s cash offer is in furtherance of the Company’s previously announced intent to seek to privatize NTEEP and is conditional upon Nam Tai receiving acceptances and/or purchases totaling at least 90% of the NTEEP shares held by NTEEP’s independent shareholders. If successful, the total cash consideration to privatize NTEEP will amount to approximately US$43 million.

The joint announcement by Nam Tai and NTEEP regarding the despatching of the Composite Offer Document to NTEEP’s independent shareholders accompanies this press release. That announcement and the Composite Offer Document are available on website of NTEEP at http://www.namtaieep.com/news/3.1.html.

ABOUT NAM TAI ELECTRONICS, INC.

We are an electronics manufacturing and design services provider to a select group of the world’s leading OEMs of telecommunications and consumer electronic products. Through our electronics manufacturing services operations, we manufacture electronic components and subassemblies, including LCD panels, LCD modules, RF modules, DAB modules, FPC subassemblies and image sensors modules and PCBAs for headsets containing Bluetooth wireless technology. These components are used in numerous electronic products, including mobile phones, laptop computers, digital cameras, electronic toys, handheld video game devices, and entertainment devices. We also manufacture finished products, including mobile phone accessories, home entertainment products and educational products. We assist our OEM customers in the design and development of their products and furnish full turnkey manufacturing services that utilize advanced manufacturing processes and production technologies.

Nam Tai currently has one Hong Kong listed subsidiary, Nam Tai Electronic & Electrical Products Limited (“NTEEP”). Interested investors may go to the website of The Stock Exchange of Hong Kong at www.hkex.com.hk to obtain information specific to NTEEP. The stock code of NTEEP in The Stock Exchange of Hong Kong is 2633. Investors are reminded to exercise caution when assessing such information and not to deal with the shares of Nam Tai based solely upon reliance on such information.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

Nam Tai Electronics, Inc.		Nam Tai Electronic & Electrical Products Limited
(Incorporated in the British Virgin Islands with limited liability)		(Incorporated in the Cayman Islands with limited liability)
(NYSE stock code: NTE)		(Stock code: 2633)

JOINT ANNOUNCEMENT

DESPATCH OF COMPOSITE OFFER DOCUMENT
PROPOSED PRIVATIZATION OF
NAM TAI ELECTRONIC & ELECTRICAL PRODUCTS LIMITED
BY NAM TAI ELECTRONICS, INC.
BY WAY OF A VOLUNTARY CONDITIONAL GENERAL CASH OFFER
BY YU MING INVESTMENT MANAGEMENT LIMITED ON BEHALF OF
NAM TAI ELECTRONICS, INC.
FOR ALL ISSUED SHARES IN
NAM TAI ELECTRONIC & ELECTRICAL PRODUCTS LIMITED
(OTHER THAN THOSE SHARES ALREADY OWNED BY
NAM TAI ELECTRONICS, INC.)

FINANCIAL ADVISER TO NAM TAI ELECTRONICS, INC.

Reference is made to the joint announcement dated 24^th February, 2009 jointly issued by NTEI and NTEEP in relation to the Offer (the “Announcement”). Unless the context states otherwise, terms used herein shall have the same meanings as those defined in the Announcement.

DESPATCH OF THE COMPOSITE OFFER DOCUMENT

The composite offer document (including, among others, the full terms and conditions of the Offer, the expected timetable, the advice from the independent financial adviser and the recommendation of the Independent Board Committee) jointly issued by NTEI and NTEEP in relation to the Offer, together with the accompanying form of acceptance and transfer for the Shares, were despatched to the Independent Shareholders on 16^th March, 2009.

The Offer will be open for acceptance from 16^th March, 2009 to 4:00 p.m. on 6^th April, 2009 unless extended by NTEI in accordance with the Takeovers Code.

Shareholders should note that, in the joint announcement dated 24^th February, 2009, the Offer was to be made for “all issued Shares other than those Shares already owned by NTEI and parties acting in concert with it”. However, under the Companies Law, the Offer should be made for “all issued Shares other than those Shares already owned by NTEI”. This change has been made in the said composite offer document accordingly. As the Offer is still conditional upon NTEI having received acceptances and/or purchased totaling at least 90% of the Offer Shares, this technical change will not affect the Shareholders in deciding whether to accept the Offer.

Shareholders are strongly advised to read the composite offer document carefully, including the recommendation from the Independent Board Committee and the advice from Somerley Limited in relation to the Offer, before deciding whether or not to accept the Offer.

CAUTION

If, at the close of the Offer, less than 25% of the Shares are held by the public or if the Stock Exchange believes that:

	•		a false market exists or may exist in the trading of the Shares, or
	•		there are insufficient Shares in public hands to maintain an orderly market,

then the Stock Exchange may exercise its discretion to suspend dealings in the Shares. In this connection, it should be noted that upon completion of the Offer, there may be insufficient public float for the Shares and, therefore, trading in the Shares may be suspended until a prescribed level of public float is restored.

In the event that the compulsory acquisition rights are not available to NTEI and the Offer closes, if the public float requirement is not met, NTEEP will undertake to take appropriate steps to restore its public float.

As at the date of this announcement, the non-executive director of NTEEP is Mr. KOO Ming Kown, and the independent non-executive directors of NTEEP are Mr. Thaddeus Thomas BECZAK, Mr. CHAM Yau Nam, Mr. CHAN Tit Hee, Charles, Mr. CHOI Man Chau, Michael, Mr. LEUNG Wai Hung and Mr. Roger Simon PYRKE.

The directors of NTEEP jointly and severally accept full responsibility for the accuracy of the information contained in this announcement relating to NTEEP and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this announcement relating to NTEEP have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.

The directors of NTEI jointly and severally accept full responsibility for the accuracy of information contained in this announcement (other than those relating to NTEEP) and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this announcement (other than those relating to NTEEP) have been arrived at after due and careful consideration and there are no other facts not contained in this announcement the omission of which would make any statement in the announcement misleading.

By order of the board of		By order of the board of
NAM TAI ELECTRONICS, INC.		NAM TAI ELECTRONIC & ELECTRICAL PRODUCTS LIMITED
Koo Ming Kown		Chan Bo Shan
Chairman		Company Secretary

Hong Kong, 16^th March, 2009

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this composite offer document or the offer contained herein, you should consult a licensed securities dealer or registered institution in securities, a bank manager, solicitor, professional accountant or other professional adviser.

If you have sold all your shares in Nam Tai Electronic & Electrical Products Limited, you should at once hand this composite offer document and the accompanying form of acceptance and transfer for the shares of Nam Tai Electronic & Electrical Products Limited to the purchaser or transferee or to the licensed securities dealer or registered institution in securities or other agent through whom the sale was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this composite offer document, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this composite offer document.

Nam Tai Electronics, Inc.

(Incorporated in the British Virgin Islands with limited liability)
(NYSE Stock Code: NTE)

Nam Tai Electronic & Electrical Products Limited

(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 2633)

COMPOSITE OFFER DOCUMENT RELATING TO
PROPOSED PRIVATISATION OF
NAM TAI ELECTRONIC & ELECTRICAL PRODUCTS LIMITED
BY NAM TAI ELECTRONICS, INC.
BY WAY OF A VOLUNTARY CONDITIONAL GENERAL CASH OFFER BY
YU MING INVESTMENT MANAGEMENT LIMITED ON BEHALF OF NAM
TAI ELECTRONICS, INC.
FOR ALL THE ISSUED SHARES IN
NAM TAI ELECTRONIC & ELECTRICAL PRODUCTS LIMITED
(OTHER THAN THOSE SHARES ALREADY OWNED BY NAM TAI
ELECTRONICS, INC.)

Financial adviser to Nam Tai Electronics, Inc.

Independent financial adviser to the independent board committee of
Nam Tai Electronic & Electrical Products Limited

A letter from Yu Ming Investment Management Limited containing, among other things, details of the terms of the offer is set out on pages 5 to 12 of this composite offer document. A letter from the board of directors of Nam Tai Electronic & Electrical Products Limited is set out on pages 13 to 16 of this composite offer document.

A letter from the independent board committee of Nam Tai Electronic & Electrical Products Limited to the independent shareholders of Nam Tai Electronic & Electrical Products Limited is set out on pages 17 and 18 of this composite offer document. A letter from Somerley Limited containing its opinion and advice to the independent board committee of Nam Tai Electronic & Electrical Products Limited is set out on pages 19 to 42 of this composite offer document.

The procedure for acceptance and settlement of the offer is set out in Appendix II of this composite offer document and in the accompanying form of acceptance and transfer for the shares of Nam Tai Electronic & Electrical Products Limited. Acceptances of the offer for the shares of Nam Tai Electronic & Electrical Products Limited must be received by Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, by no later than 4:00 p.m. on Monday, 6 April 2009, or such later time as Nam Tai Electronics, Inc. may determine and announce.

14 March 2009

SUMMARY

The following is a summary of the selected sections of this composite offer document. Terms in capital letters have meanings ascribed to them in the section headed “Definitions”. You are advised to read the summary in conjunction with the full text of this composite offer document.

LETTER FROM YU MING

For the full letter, please refer to pages 5 to 12 of this composite offer document.

•		Offer is conditional upon NTEI receiving acceptances and/or purchasing not less than 90% Offer Shares.
•		Offer price per Share is at approximately 163.2% premium over the market price immediately before the Announcement Date, which ranks the second highest among all privatisation attempts in the Stock Exchange in 2008 and 2009 year to date.
•		For further clarification on the procedures for acceptances of the Offer, please contact Mr. Warren Lee or Mr. Gavin Lam of Yu Ming at 2877 2340.

LETTER FROM THE BOARD OF NTEEP

For the full letter, please refer to pages 13 to 16 of this composite offer document.

Recommend you to read the letter of the Independent Board Committee.

If, at the close of the Offer, less than 25% of the Shares are held by the public or if the Stock Exchange believes that:

•		a false market exists or may exist in the trading of the Shares, or
•		there are insufficient Shares in public hands to maintain an orderly market,

then the Stock Exchange may exercise its discretion to suspend dealings in the Shares. In this connection, it should be noted that upon completion of the Offer, there may be insufficient public float for the Shares and, therefore, trading in the Shares may be suspended until a prescribed level of public float is restored.

In the event that the compulsory acquisition rights are not available to NTEI and the Offer closes, if the public float requirement is not met, NTEEP will under take to take appropriate steps to restore its public float.

SUMMARY

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

For the full letter, please refer to pages 17 and 18 of this composite offer document.

LETTER FROM SOMERLEY

For the full letter, please refer to pages 19 to 42 of this composite offer document.

ACCEPTANCE PROCEDURE

If you hold Shares through a CCASS participant (including a stock broker/custodian) and intend to accept the Offer:

•		Call your CCASS participant (including a stock broker/custodian) immediately to tell him your intention.
•		Ask your CCASS participant (including a stock broker/custodian) for a form designated by him to confirm your intention in writing immediately.
•		If you hold Shares as a registered Shareholder and intend to accept the Offer, fill in the accompanying form of acceptance and transfer for the Shares and return it to the Registrar immediately.

CONTENTS

		Page
Definitions			1
Expected timetable			4
Letter from Yu Ming			5
Letter from the Board of NTEEP			13
Letter from the Independent Board Committee			17
Letter from Somerley			19
Appendix I — Financial information of NTEEP			43
Appendix II — Further terms of the Offer			110
Appendix III — Valuation report			116
Appendix IV — General information			146
Accompanying Document: Form of acceptance and transfer

DEFINITIONS

In this composite offer document, unless the context otherwise requires, the following expressions have the following meanings:

“Accepting Shareholder(s)”		Independent Shareholders who accept the Offer
“acting in concert”		shall have the meaning set out in the Takeovers Code
“Announcement Date”		24 February 2009, being the date of the joint announcement of NTEI and NTEEP in respect of the Offer
“associate(s)”		shall have the meaning set out in the Takeovers Code
“Board”		board of directors
“business day”		any day on which the Stock Exchange is open for the transaction of business
“CCASS”		the Central Clearing and Settlement System established and operated by Hong Kong Securities Clearing Company Limited
“Closing Date”		6 April 2009 or such later date as may be extended by NTEI in accordance with the Takeovers Code
“Companies Law”		the Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands
“Executive”		the executive director of the corporate finance division of the Securities and Futures Commission of Hong Kong or any of its delegates
“HKSCC”		Hong Kong Securities Clearing Company Limited
“Hong Kong”		the Hong Kong Special Administrative Region of the People’s Republic of China
“Independent Board Committee”		the independent board committee of NTEEP comprising Mr. Thaddeus Thomas Beczak, Mr. Cham Yau Nam, Mr. Chan Tit Hee, Charles, Mr. Choi Man Chau, Michael, Mr. Leung Wai Hung and Mr. Roger Simon Pyrke, to advise the Independent Shareholders in respect of the Offer

DEFINITIONS

“Independent Shareholders”		Shareholders other than NTEI
“Latest Practicable Date”		13 March 2009, being the latest practicable date prior to the printing of this composite offer document for ascertaining certain information referred in this composite offer document
“LCH”		LCH (Asia-Pacific) Surveyors Limited, an independent professional surveyor and property valuer
“Listing Rules”		The Rules Governing the Listing of Securities on the Stock Exchange
“NTEEP”		Nam Tai Electronic & Electrical Products Limited, a company incorporated in the Cayman Islands with limited liability and the shares of which are listed on the main board of the Stock Exchange with a designated stock code of 2633
“NTEEP Group”		NTEEP and its subsidiaries
“NTEI”		Nam Tai Electronics, Inc., a company incorporated in the British Virgin Islands with limited liabilities and the shares of which are listed on the main board of the NYSE, with a designated stock code of NTE
“NYSE”		New York Stock Exchange
“Offer”		the voluntary conditional general cash offer for all the issued Shares other than those owned by NTEI at HK$1.50 per Share
“Offer Share(s)”		issued Shares other than those already owned by NTEI and parties acting in concert with it
“PRC”		People’s Republic of China
“Registrar”		Computershare Hong Kong Investor Services Limited, the Hong Kong branch share registrar and transfer office of NTEEP, with its address at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong

DEFINITIONS

“SFO”		Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong
“Share(s)”		existing ordinary share(s) of HK$0.01 each in the issued share capital of NTEEP
“Shareholder(s)”		holders of Share(s)
“Somerley”		Somerley Limited, a corporation licensed to carryout Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the Securities and Futures Ordinance having CE registration number AAJ067, and the independent financial adviser to the Independent Board Committee in respect of the Offer
“Stock Exchange”		The Stock Exchange of Hong Kong Limited
“Takeovers Code”		The Hong Kong Code on Takeovers and Mergers
“Valuation Report”		the valuation report dated 14 March 2009 produced by LCH in relation to the property assets held by the NTEEP Group
“Yu Ming”		Yu Ming Investment Management Limited, the financial adviser to NTEI and a corporation licensed under the Securities and Futures Ordinance to carry out regulated activities of type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management), and a company incorporated in Hong Kong with limited liability
“HK$”		Hong Kong dollars, the lawful cur rency of Hong Kong
“Rmb”		Renminbi, the lawful currency of the PRC
“US$”		United States dollars, the lawful currency of the United States

Exchange rate: US$1.00 = HK$7.80, US$1.00 = Rmb6.83

EXPECTED TIMETABLE

Commencement date of the Offer and posting date		Monday, 16 March 2009
Latest time and date for acceptance of the Offer		4:00 p.m. on Monday, 6 April 2009
Closing date of the Offer (Note 1)		Monday, 6 April 2009
Announcement in respect of the closing of the Offer and acceptance under the Offer		7:00 p.m. on Monday, 6 April 2009
Latest date for posting of remittances for the amounts due under the Offer in respect of valid acceptances (assuming the Offer becomes or is declared unconditional on 6 April 2009) (Note 2)		Thursday, 16 April 2009
Latest time and date of the Offer remaining open for acceptance assuming the Offer becomes or is declared unconditional on 6 April 2009		4:00 p.m. on Monday, 20 April 2009

LETTER FROM YU MING

14 March 2009

To the Independent Shareholders,

Dear Sir or Madam,

PROPOSED PRIVATISATION OF
NAM TAI ELECTRONIC & ELECTRICAL PRODUCTS LIMITED
BY NAM TAI ELECTRONICS, INC.
BY WAY OF A VOLUNTARY CONDITIONAL GENERAL CASH OFFER
BY YU MING INVESTMENT MANAGEMENT LIMITED ON BEHALF OF
NAM TAI ELECTRONICS, INC.
FOR ALL THE ISSUED SHARES IN
NAM TAI ELECTRONIC & ELECTRICAL PRODUCTS LIMITED
(OTHER THAN THOSE SHARES ALREADY OWNED BY NAM
TAI ELECTRONICS, INC.)

INTRODUCTION

On 24 February 2009, NTEI and NTEEP jointly announced NTEI’s intention to make a voluntary conditional general cash offer for all the issued shares in NTEEP (other than those Shares already owned by NTEI) with an ultimate aim to privatize NTEEP by way of the Offer.

This letter sets out the detailed terms of the Offer, together with the information on NTEI and NTEI’s intention regarding the NTEEP Group. Fur ther details of the Offer are also set out in Appendix II to this composite offer document, the accompanying form of acceptance and transfer for the Shares. Your attention is also drawn to the letter from the Board of NTEEP, the letter from the Independent Board Committee and the letter from Somerley contained in this composite offer document.

LETTER FROM YU MING

THE OFFER

We are making the Offer for and on behalf of NTEI, subject to the terms and conditions set out in this composite offer document (including, without limitation, those in Appendix II to this composite offer document) and in the accompanying form of acceptance and transfer for the Offer, to acquire all the Shares (other than those owned by NTEI) on the following basis:

For each Share		HK$1.50 payable in cash

The offer price represents:

(i)		a premium of approximately 163.2% over the closing price of HK$0.57 per Share as quoted on the Stock Exchange on 20 February 2009 (being the last trading day prior to the suspension of trading in the Shares);
(ii)		a premium of approximately 158.6% over the average closing price of HK$0.58 per Share for the 10 trading days up to and including 20 February 2009;
(iii)		a premium of approximately 123.5% over the average closing price of HK$0.67 per Share for the 30 trading days up to and including 20 February 2009;
(iv)		a premium of approximately 7.1% over the closing price of HK$1.4 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and
(v)		a premium of approximately 240.9% over the audited consolidated net asset value per Share of approximately HK$0.44 as at 31 December 2008.

The Offer is conditional upon NTEI having received acceptances and/or purchased totalling at least 90% of the Offer Shares. The first closing date of the Offer will fall on the 21st day from the date on which this composite offer document is posted (that is, 6 April 2009).

NTEI will not revise the offer price for the Shares, and the above offer price is final.

LETTER FROM YU MING

COMPARISON WITH OTHER PRIVATISATIONS

Although other privatisations involve companies which may differ in operations and businesses as compared to the NTEEP Group, they provide prevailing market ranges and averages for the key evaluation parameters for the purposes of comparing the terms of the Offer. The Offer ranks the second among all privatisations in 2008 and 2009 year to date, in terms of the premium over all the following reference figures:

														Premium over/Discount to												Offer price’s
														average closing share price												premium over/
														prior to privatisation announcement												discount to
										Date of																latest net
						Cancellation/				Initial				Last												asset value
Company		Stock code				Offer price				announcement				trading day				10 trading days				30 trading days				per share
						(HK$)
China Huiyuan Juice Group Limited			1886				12.20			3-Sep-08					195.00	%			208.00	%			198.00	%			239.91	%
NTEEP			2633				1.50			24-Feb-09					163.20	%			158.60	%			123.50	%			240.90	%
Crocodile Garments Limited			122				0.40			17-Feb-09					92.30	%			94.84	%			95.10	%			-59.30	%
Shaw Brothers (Hong Kong) Limited			80				13.35			22-Dec-08					64.20	%			70.19	%			73.50	%			169.70	%
PCCW Limited			8				4.50			4-Nov-08					63.64	%			52.65	%			14.50	%			1,566.67	%
CITIC International Financial Holdings Limited			183				7.60			10-Jun-08					33.33	%			40.35	%			44.00	%			65.58	%
Pacific Century Premium Developments			432				2.85			13-Feb-08					26.10	%			26.61	%			19.20	%			-10.10	%
Mirabell International Holdings Limited			1179				6.00			28-Feb-08					15.16	%			13.21	%			17.65	%			18.81	%
Wing Lung Bank Limited			96				156.50			2-Jun-08					6.17	%			4.24	%			9.72	%			191.17	%
China Netcom Group Corporation (Hong Kong) Limited			906				26.78			2-Jun-08					4.40	%			8.60	%			12.70	%			92.25	%
Natural Beauty Bio-Technology Limited			157				1.20			25-Nov-08					-15.49	%			5.08	%			-13.85	%			166.08	%
Average															58.91	%			62.03	%			54.00	%			243.79	%
Maximum															195.00	%			208.00	%			198.00	%			1,566.67	%
Minimum															-15.49	%			4.24	%			-13.85	%			-59.30	%

LETTER FROM YU MING

CONSIDERATION

As disclosed in the letter from the Board of NTEEP contained in this composite offer document, as at the Latest Practicable Date, NTEEP had 881,670,588 Shares in issue, save for which NTEEP has no other relevant securities (as defined under Note 4 to the Rule 22 of the Takeovers Code) in issue.

Based on the above and on the basis that NTEI would not acquire any Shares from the Latest Practicable Date up to the date of posting of this composite offer document, the number of Shares not already owned by NTEI and parties acting in concert with it is 221,455,118 (which represent approximately 25.12% of the issued share capital of NTEEP). Based on 221,455,118 Shares, the total consideration of the Offer amounts to approximately HK$332.2 million.

NTEI will use its internal financial resources to implement the Offer. Yu Ming is satisfied that sufficient financial resources are available to NTEI for the full implementation of the Offer.

INFORMATION ON NTEI

NTEI is a company incorporated under the laws of the British Virgin Islands with limited liability. As the controlling shareholder of NTEEP, NTEI is a holding company of an electronics manufacturing and design services provider with a worldwide coverage of customers. Listed on the NYSE, NTEI had a market capitalization of approximately US$138.9 million (equivalent to approximately HK$1,083.4 million) as at 12 March 2009. The audited net profit of NTEI for the financial year ended 31 December 2007 and the unaudited net profit of NTEI for the financial year 31 December 2008 were approximately US$69.5 million (equivalent to approximately HK$542.1 million) and approximately US$30.6 million (equivalent to approximately HK$238.7 million) respectively. The unaudited net asset value of NTEI was approximately US$322.3 million (equivalent to approximately HK$2,513.9 million) as at 31 December 2008 (all figures prepared in accordance with generally accepted accounting principles in the United States).

EFFECT OF ACCEPTING THE OFFER

By accepting the Offer, the Independent Shareholders will sell their Shares and all rights attaching to them as at the Announcement Date, including the right to receive all dividends and other distributions, if any, declared, made or paid by NTEEP on or after the Announcement Date.

LETTER FROM YU MING

STAMP DUTY

Seller’s ad valorem stamp duty for the Shares registered with the Hong Kong branch register arising in connection with acceptances of the Offer will be payable by each Shareholder at the rate of HK$1 for every HK$1,000 or part thereof of the consideration payable by NTEI for such Shareholder’s Shares and will be deducted from the cash amount due to such Shareholder under the Offer.

INTENTION OF NTEI

If the Offer becomes unconditional, NTEI will exercise any compulsory acquisition rights to which it is entitled under Rule 2.11 of the Takeovers Code and Section 88 of the Companies Law to acquire the Shares not already owned by NTEI. The Board of NTEI intends to subsequently withdraw the listing status of the NTEEP Shares on the Stock Exchange pursuant to Rule 6.15 of the Listing Rules, but has no intention to introduce significant change to the existing operations, business, management and directorship of NTEEP (including the continued employment of all employees and any redeployment of the fixed assets of NTEEP).

According to Rule 15.6 of the Takeovers Code, to exercise the power of compulsory acquisition to acquire the Shares not tendered under the Offer, the Offer may not remain open for acceptance for more than four months from the posting of this composite offer document, unless the NTEI has by that time become entitled to exercise the powers of compulsory acquisition available to it under the Companies Law.

REASONS FOR NTEI TO PRIVATIZE NTEEP

The price of the Shares from 5 December 2005 (being the day on which the last voluntary conditional general cash offer made by NTEI lapsed) to the Announcement Date was down by 61.2% from HK$1.47 to HK$0.57 per share. The performance lagged far behind Hang Seng Index, which edged down by 16.2% during the same period. The price weakness of the Shares hampers the fund raising ability of NTEEP. In this regard, one of the main purposes of maintaining NTEEP as a listed company in Hong Kong is compromised. The privatisation will enable NTEI simplify its corporate structure, reduce administration time and costs and can save significant resources of NTEI on listing compliance and investor relations in Hong Kong.

BENEFIT OF THE OFFER FOR THE INDEPENDENT SHAREHOLDERS

The Offer gives the Independent Shareholders an opportunity to realize their investments in NTEEP at a price significantly above both the current market price and its net asset value per share. You should accept the Offer.

LETTER FROM YU MING

PROCEDURES FOR ACCEPTANCES

To accept the Offer, the Accepting Shareholders should complete the accompanying form of acceptance and transfer for the Shares in accordance with the instructions printed thereon, which forms part of the terms and conditions of the Offer. The completed form of acceptance and transfer for the Shares should then be forwarded, together with the relevant Share certificate(s) and /or transfer receipt(s) and/or any document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) for not less than the number of Share tendered under the Offer, by post or by hand, to the Registrar at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible but in any event not later than 4:00 p.m. on 6 April 2009, or such later time as NTEI may determine and announce in accordance with the Takeovers Code. No acknowledgement of receipt of any form of acceptance and transfer, share certificate(s), transfer receipt(s) or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) will be given.

Your attention is drawn to the Appendix II to this composite offer document and in accompanying form of acceptance and transfer for the Shares.

SETTLEMENT OF THE OFFER

Subject to the Offer becoming unconditional and provided that the form of acceptance and transfer for the Shares, together with the relevant Share certificate(s) and/or transfer receipt(s) and/or any document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof), are valid, complete and in good order and have been received by the Registrar by no later than 4:00 p.m. on 6 April 2009, or such later time as NTEI may determine and announce in accordance with the Takeovers Code, a cheque for the amount due to each of the Accepting Shareholders in respect of the Shares tendered under the Offer, less seller’s ad valorem stamp duty payable by them, will be despatched to the Accepting Shareholders by ordinary post at their own risk within 10 days of the later of the date on which the Offer becomes or is declared unconditional and the date of receipt of duly completed form of acceptance and transfer from the Accepting Shareholders.

The consideration to which any Accepting Shareholder is entitled under the Offer will be paid by NTEI in full in accordance with the terms of the Offer set out in this composite offer document (including the appendices) and the accompanying form of acceptance and transfer for Shares without regard to any other lien, right of set-off, counterclaim or other analogous right to which NTEI may otherwise be, or claim to be, entitled against such Accepting Shareholder.

LETTER FROM YU MING

RETURN OF SHARE CERTIFICATES IF THE OFFER LAPSES

If the Offer lapses, NTEI will, as soon as possible but in any event within 10 days thereof, despatch the Share certificates lodged with the form of acceptance and transfer for Shares to, or make such Share certificates available for collection by, the Accepting Shareholders who accept the Offer by ordinary post at their own risks.

NOMINEE REGISTRATION AND DESPATCH OF PAYMENT

To ensure equality of treatment of all Shareholders, those registered Shareholders who hold the Shares as nominee for more than one beneficial owner should, as far as practicable, treat the holding of each beneficial owner separately. In order for the beneficial owner of the Shares, whose investments are registered in nominee names, to accept the Offer, it is essential that they provide instructions to their nominees of their intentions with regard to the Offer.

All documents and remittances will be sent to the Independent Shareholders through ordinary post at their own risk. These documents and remittances will be sent to them at their respective addresses as they appear in the register of members, or, in case of joint Independent Shareholders, to the Independent Shareholders whose name appears first in the said register of members, unless otherwise specified in the relevant forms of acceptance and transfer for the Shares completed and returned by the Accepting Shareholders. None of NTEI, the parties acting in concert with NTEI, Yu Ming, NTEEP, the Registrar or any of their respective directors, officers, or associates or any other person involved in the Offer will be responsible for any loss or delay in transmission of such documents and remittances or any other liabilities that may arise as a result thereof.

TAXATION

Independent Shareholders are recommended to consult their own professional advisers if they are in any doubt as to the taxation implications of accepting the Offer. None of NTEI, the parties acting in concert with NTEI, Yu Ming, NTEEP, the Registrar or any of their respective directors, officers, or associates or any other person involved in the Offer will be responsible for any taxation effects on any persons as a result of their acceptance of the Offer.

LETTER FROM YU MING

GENERAL

Independent Shareholders are advised to read carefully the letter from the Independent Board Committee and the letter from Somerley to the Independent Board Committee as contained in this composite offer document before deciding whether or not to accept the Offer.

Your attention is also drawn to the further terms of the Offer and the additional information set out in the appendices to this composite offer document.

If you need further clarification on the procedures for acceptances of the Offer, please contact Mr. Warren Lee or Mr. Gavin Lam of Yu Ming at 2877 2340.

LETTER FROM THE BOARD OF NTEEP

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 2633)

Non-Executive Director:		Registered Office:
KOO Ming Kown (Chairman)		Cricket Square,
		Hutchins Drive,
Independent Non-Executive Directors:		P.O. Box 2681,
Thaddeus Thomas BECZAK		Grand Cayman KY1-1111,
CHAM Yau Nam		Cayman Islands
CHAN Tit Hee, Charles
CHOI Man Chau, Michael		Head Office:
LEUNG Wai Hung		Units 5811-12, 58th Floor, The Center
Roger Simon PYRKE		99 Queen’s Road Central
		Hong Kong
		14 March 2009
To the Independent Shareholders,
Dear Sir or Madam,

PROPOSED PRIVATISATION OF
NAM TAI ELECTRONIC & ELECTRICAL PRODUCTS LIMITED
BY NAM TAI ELECTRONICS, INC.
BY WAY OF A VOLUNTARY CONDITIONAL GENERAL CASH OFFER
BY YU MING INVESTMENT MANAGEMENT LIMITED ON BEHALF OF
NAM TAI ELECTRONICS, INC.
FOR ALL THE ISSUED SHARES IN
NAM TAI ELECTRONIC & ELECTRICAL PRODUCTS LIMITED
(OTHER THAN THOSE SHARES ALREADY OWNED BY
NAM TAI ELECTRONICS, INC.)

INTRODUCTION

Reference is made to the announcement issued jointly by NTEEP and NTEI dated 24 February 2009, in which the Board of NTEEP had been informed that a proposed privatisation of NTEEP by way of a voluntary conditional general cash offer by Yu Ming, on behalf of NTEI, to acquire all the issued Shares of NTEEP (other than those Shares already owned by NTEI). The listing status of NTEEP will thereafter be withdrawn.

LETTER FROM THE BOARD OF NTEEP

The purpose of this composite offer document is to provide you with, among other matters, information relating to NTEEP, the terms of the Offer as well as setting out the letter from the Independent Board Committee containing its recommendation and advice to the Independent Shareholders and the letter from Somerley containing its advice to the Independent Board Committee in respect of the Offer.

THE OFFER

The Offer is made by Yu Ming on behalf of NTEI, which is subject to the terms and conditions set out in this composite offer document (including, without limitation, those in Appendix II to this composite offer document) and in the accompanying form of acceptance and transfer for the Shares.

The price of the Offer represents:

(i)		a premium of approximately 163.2% over the closing price of HK$0.57 per Share as quoted on the Stock Exchange on 20 February 2009 (being the last trading day prior to the suspension of trading in the Shares);
(ii)		a premium of approximately 158.6% over the average closing price of HK$0.58 per Share for the 10 trading days up to and including 20 February 2009;
(iii)		a premium of approximately 123.5% over the average closing price of HK$0.67 per Share for the 30 trading days up to and including 20 February 2009;
(iv)		a premium of approximately 7.1% over the closing price of HK$1.4 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and
(v)		a premium of approximately 240.9% to the audited consolidated net asset value per Share of approximately HK$0.44 as at 31 December 2008.

The Offer is conditional upon NTEI having received acceptances and/or purchased totalling at least 90% of the Offer Shares. The first closing date of the Offer will fall on the 21st day from the date on which this composite offer document is posted (that is 6 April 2009).

NTEI will not revise the offer price for the Shares, and the above offer price is final.

COMPULSORY ACQUISITION AND WITHDRAWAL OF LISTING

If NTEI receives acceptances and/or purchases totaling at least 90% of the Offer Shares within four months since the date of posting of this composite offer document,

LETTER FROM THE BOARD OF NTEEP

(i)		NTEI intends to exercise any compulsory acquisition rights to which it is entitled under Rule 2.11 of the Takeovers Code and Section 88 of the Companies Law to acquire the remaining Shares not already owned by NTEI. Upon completion of such compulsory acquisition, NTEEP would become a wholly-owned subsidiary of NTEI and application will be made for the withdrawal of listing of the Shares from the Stock Exchange in accordance with Rule 6.15 of the Listing Rules. An announcement in relation to the withdrawal application shall be made before the last day of dealing of the Shares; and
(ii)		NTEEP will apply for a suspension of dealings in the Shares from the closing of the Offer up to the withdrawal of listing of the Shares from the Stock Exchange.

MAINTAINING THE LISTING

If NTEI does not become entitled to exercise such power of compulsory acquisition set out above (whether by reason of not acquiring 90% of the Offer Shares or otherwise) within four months from the date of despatch of this composite offer document, it is NTEI’s intention to maintain the listing of NTEEP on the Stock Exchange.

If, at the close of the Offer, less than 25% of the Shares are held by the public or if the

Stock Exchange believes that:

•       a false market exists or may exist in the trading of the Shares, or

•       there are insufficient Shares in public hands to maintain an orderly market,

then the Stock Exchange may exercise its discretion to suspend dealings in the Shares. In this connection, it should be noted that upon completion of the Offer, there may be insufficient public float for the Shares and, therefore, trading in the Shares may be suspended until a prescribed level of public float is restored.

In the event that the compulsory acquisition rights are not available to NTEI and the Offer closes, if the public float requirement is not met, NTEEP will undertake to take appropriate steps to restore its public float.

SHAREHOLDING

As at the Latest Practicable Date, the shareholding of NTEEP is as follows:

			Number of				% of the total
			Shares owned				issued shares
NTEI			660,215,470				74.88
Independent Shareholders			221,455,118				25.12
Total			881,670,588				100.00

LETTER FROM THE BOARD OF NTEEP

Note:

As at the Latest Practicable Date, as far as is known to NTEI, no parties acting in concert with it held any Shares.

As at the Latest Practicable Date, (i) NTEEP does not have other class of securities (other than the Shares), outstanding options, derivatives, war rants or other securities which are convertible or exchangeable into Shares, and (ii) NTEI and the parties acting in concert with it do not own any relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) in NTEEP other than those disclosed above.

COMPOSITION OF THE INDEPENDENT BOARD COMMITTEE

Pursuant to Rule 2.8 of the Takeovers Code, the independent board committee of NTEEP shall comprise all non-executive directors of NTEEP who have no direct or indirect interest in the Offer (other than as a Shareholder). Mr. Koo Ming Kown, a non-executive director of NTEEP, is also an executive director of NTEI, a party acting in concert with NTEI. Given his interest or relationship with NTEI, he is not considered sufficiently independent to advise the Independent Shareholders in respect of the Offer and was not appointed as a member of the Independent Board Committee.

Mr. Thaddeus Thomas Beczak, Mr. Cham Yau Nam, Mr. Chan Tit Hee, Charles, Mr. Choi Man Chau, Michael, Mr. Leung Wai Hung and Mr. Roger Simon Pyrke, being all the independent non-executive directors of NTEEP, have been appointed as members of the Independent Board Committee for consideration of and making of recommendations to the Independent Shareholders in respect of the terms of the Offer. Somerley has been appointed as the independent financial adviser to advise the Independent Board Committee on the fairness and reasonableness of the terms of the Offer.

RECOMMENDATION

Your attention is drawn to the letter from Independent Board Committee set out in this composite offer document which contains its recommendation to the Independent Shareholders in respect of the Offer and the letter from Somerley which contains its advice to the Independent Board Committee in respect of the fairness and reasonableness of the Offer, and the principal factors and reasons it has considered before arriving at its advice to the Independent Board Committee. You are also advised to read this composite offer document and the accompanying form of acceptance and transfer for Shares in respect of the acceptance and settlement procedures of the Offer.

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Nam Tai Electronic & Electrical Products Limited
(Incorporated in the Cayman Islands with limited liability)
(Stock code: 2633)

14 March 2009

To the Independent Shareholders,

Dear Sir or Madam,

PROPOSED PRIVATISATION OF
NAM TAI ELECTRONIC & ELECTRICAL PRODUCTS LIMITED
BY NAM TAI ELECTRONICS, INC.
BY WAY OF A VOLUNTARY CONDITIONAL GENERAL CASH OFFER
BY YU MING INVESTMENT MANAGEMENT LIMITED ON BEHALF OF
NAM TAI ELECTRONICS, INC.
FOR ALL THE ISSUED SHARES IN
NAM TAI ELECTRONIC & ELECTRICAL PRODUCTS LIMITED
(OTHER THAN THOSE SHARES ALREADY OWNED BY NAM
TAI ELECTRONICS, INC.)

We have been appointed by the Board of NTEEP to form the Independent Board Committee to consider the terms of the Offer and to make recommendations to the Independent Shareholders in connection with the Offer, details of which are set out in the Letter from the Board of NTEEP in the composite offer document dated 14 March 2009 (the “Offer Document”) of which this letter forms part. The terms used in this letter shall have the same meanings as defined in the Offer Document unless the context otherwise requires.

Somerley has been appointed as the independent financial adviser to advise us in respect of the terms of the Offer.

We wish to draw your attention to the letter from Yu Ming set out on pages 5 to 12 of the Offer Document which contains, inter alia, information about the Offer, and the letter of advice from Somerley set out on pages 19 to 42 of the Offer Document which contains its advice in respect of the terms of the Offer.

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account the advice of Somerley, we consider the terms of the Offer are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to accept the Offer.

Yours faithfully,

Independent Board Committee

Nam Tai Electronic & Electrical Products Limited

Thaddeus Thomas Beczak Chan Tit Hee, Charles Leung Wai Hung		Cham Yau Nam Choi Man Chau, Michael Roger Simon Pyrke

LETTER FROM SOMERLEY

The following is the text of the letter of advice from Somerley to the Independent Board Committee for inclusion in this document.

		SOMERLEY LIMITED 10th Floor The Hong Kong Club Building 3A Chater Road Central Hong Kong

14 March 2009

To: the Independent Board Committee

Dear Sirs,

PROPOSED PRIVATISATION OF
NAM TAI ELECTRONIC & ELECTRICAL PRODUCTS LIMITED
BY NAM TAI ELECTRONICS, INC.
BY WAY OF A VOLUNTARY CONDITIONAL GENERAL CASH OFFER
BY YU MING INVESTMENT MANAGEMENT LIMITED ON BEHALF OF
NAM TAI ELECTRONICS, INC.
FOR ALL THE ISSUED SHARES IN
NAM TAI ELECTRONIC & ELECTRICAL PRODUCTS LIMITED
(OTHER THAN THOSE SHARES ALREADY OWNED BY NAM
TAI ELECTRONICS, INC.)

INTRODUCTION

We refer to our appointment to advise the Independent Board Committee in connection with the proposed privatisation of NTEEP by NTEI, the controlling shareholder of NTEEP holding approximately 74.88% of the entire issued share capital of NTEEP, by way of a voluntary conditional general cash offer for all the issued shares in NTEEP (other than those Shares already owned by NTEI) at a price of HK$1.5 per Offer Share. Details of the Offer are contained in the composite offer document to the Independent Shareholders dated 14 March 2009 (the “Composite Document”), of which this letter forms part. Unless the context otherwise requires, terms used in this letter shall have the same meanings as defined in the Composite Document.

LETTER FROM SOMERLEY

On 24 February 2009, NTEI and NTEEP jointly announced that Yu Ming, NTEI’s financial adviser, would make a voluntary conditional general cash offer for all the issued shares in NTEEP (other than those Shares already owned by NTEI). If NTEI receives acceptances totalling at least 90% of the Offer Shares, the Offer becomes unconditional. After the Offer becomes unconditional, NTEI intends to exercise any compulsory acquisition rights to which it is entitled under Rule 2.11 of the Takeovers Code and Section 88 of the Companies Law to acquire the remaining Shares, following which NTEI intends to withdraw the listing of NTEEP from the Stock Exchange.

The Board of NTEEP consists of one non-executive director and six independent non-executive directors. In accordance with Rule 2.8 of the Takeovers Code, members of the Independent Board Committee should comprise all non-executive directors of NTEEP who have no direct or indirect interest in the Offer (other than as a Shareholder). Mr. Koo Ming Kown, a non-executive director of NTEEP, is also an executive director of NTEI, a party acting in concert with NTEI. Mr Koo Ming Kown is therefore not considered sufficiently independent to advise the Independent Shareholders in respect of the Offer. Consequently, the six independent non-executive directors of NTEEP, namely Mr. Thaddeus Thomas Beczak, Mr. Cham Yau Nam, Mr. Chan Tit Hee, Charles, Mr. Choi Man Chau, Michael, Mr. Leung Wai Hung and Mr. Roger Simon Pyrke, have been appointed to constitute the Independent Board Committee in respect of the Offer. Somerley has been appointed to advise the Independent Board Committee in this regard, in particular as to whether the terms of the Offer are fair and reasonable, and to give a recommendation as regards acceptance of the Offer.

Somerley is not associated with the NTEI, or NTEEP or their respective substantial shareholders or any party acting, or presumed to be acting, in concert with any of them and, accordingly, is considered eligible to give independent advice on the Offer. Apart from normal professional fees payable to us in connection with this appointment, no arrangement exists whereby we will receive any fee or benefits from NTEI or NTEEP, or their respective substantial shareholders or any party acting or presumed to be acting in concert with any of them.

In formulating our opinion and recommendation, we have reviewed, among other materials, the financial information of NTEEP and the valuation report of the properties held by NTEEP Group as set out in Appendix I and III respectively to this Composite Document. We have discussed with the Board of NTEEP the past performance and future prospects of NTEEP Group and, with the valuer of NTEEP the basis, assumptions and the methodology used in preparing the valuation report. We have relied on the information and facts supplied, and the opinions expressed, by the management and directors of NTEEP (the “Directors”) and have assumed that they are true, accurate and complete and will remain true, accurate and complete at the date of the Composite Document and during the period the Offer is open for acceptance. We have also sought and received confirmation from the Directors that no material facts have been omitted from the information supplied and opinions expressed to us. We have no reason to believe that any material information has been withheld from us, or to

LETTER FROM SOMERLEY

doubt the truth or accuracy of the information provided. We have relied on such information and consider that the information we have received is sufficient for us to reach an informed view. We have not, however, conducted any independent investigation into the business and affairs of NTEEP Group.

TERMS OF THE OFFER

The terms set out below are summarised from the “Letter from Yu Ming” and Appendix II contained in the Composite Document, with some additional comments from ourselves. Independent Shareholders are encouraged to read the relevant sections in full.

1.		Price
		The Offer is being made for all the 221,455,118 Shares not already owned by NTEI on the following basis:

For each Offer Share		HK$1.50 payable in cash

		The Offer price for the Offer Shares is final and is not subject to revision. However, NTEI reserves the right to extend the Offer after despatch of the Composite Document. Yu Ming is satisfied that sufficient financial resources are available to NTEI for the full implementation of the Offer.
2.		Stamp duty
		Ad valorem stamp duty arising from acceptance of the Offer at a rate of HK$1.00 for every HK$1,000 or part thereof of the consideration for acceptance of the Offer will be deducted from the cash amount due to the Accepting Shareholders who accept the Offer in the event the Offer becomes unconditional. NTEI will use the amount so deducted to pay the relevant stamp duty on behalf of the Accepting Shareholders. On this basis, a holder of a board lot of 1,000 Shares would receive HK$1,498 net from NTEI.
3.		Condition
		The Offer is conditional up on NTEI having received acceptances and /or made purchases totalling at least 90% of the Offer Shares by 4:00 p.m. on 6 April 2009, the Closing Date. There is no other condition.
		NTEI shall publish an announcement on the Closing Date stating whether the Offer has been revised, extended, has expired or become or been declared unconditional. In the event that the offer period is not extended beyond the Closing Date and the 90% threshold is not reached by 4:00 p.m. on the Closing Date, the Offer cannot become unconditional and the Offer will lapse forthwith.

LETTER FROM SOMERLEY

		Further details of the terms and conditions of the Offer are set out in Appendix II to the Composite Document and in the form of acceptance and transfer.
4.		Compulsory acquisition and withdrawal of the listing of NTEEP
		If the Offer becomes unconditional, NTEI will exercise any compulsory acquisition rights to which it is entitled under Rule 2.11 of the Takeovers Code and Section 88 of the Companies Law. These would permit NTEI to compulsorily acquire the balance of the Shares if acceptances are received under the Offer in respect of not less than 90% of the Offer Shares. In such event, and subject to compliance with the applicable provisions of the Takeovers Code and the Listing Rules, the listing of the Shares will be withdrawn from the Stock Exchange.
		Shareholders should be aware that, if the number of Shares held by the public, as defined in the Listing Rules, comprises less than 25% of the entire issued shares of NTEEP, trading in the Shares may be suspended. Shareholders should also note the possibility that the listing of the Shares may in due course be withdrawn from the Stock Exchange.
		Under Rule 6.15 of the Listing Rules, NTEEP may withdraw its listing on the Stock Exchange after the Offer if any compulsory acquisition right is exercised resulting in the acquisition of all the listed securities of NTEEP.
		Rule 2.11 of the Takeovers Code states that, except with the consent of the Executive, where any person seeks to acquire or privatise a company by means of an offer and the use of compulsory acquisition rights, such rights may only be exercised if, in addition to satisfying any requirements imposed by law, acceptances of the offer and purchases in each case of the disinterested shares made by the offeror and persons acting in concert with it during the period of four months after posting the document total 90% of the disinterested shares. Under Rule 15.6 of the Takeovers Code, the offer may not remain open for acceptance for more than four months from the posting of the offer document, unless the offeror has by that time become entitled to exercise the powers of compulsory acquisition available to it under the Companies Law.
5.		Timetable and procedures under the Offer
		The Closing Date of the Offer is Monday, 6 April 2009. This date may be extended at the option of NTEI, but not beyond 60 days after the posting of the Composite Document, unless the Offer has previously become unconditional, except with the consent of the Executive. If the Offer becomes or is declared unconditional, it should remain open for acceptance for not less than 14 days after the date it becomes unconditional.

LETTER FROM SOMERLEY

		Procedures for acceptance of the Offer are set out in Appendix II to the Composite Document and in the accompanying form of acceptance and transfer. Most Shareholders hold their Shares through CCASS established and operated by HKSCC, in which case some prior action needs to be taken to ensure acceptance on time. If Shares are lodged with a broker/custodian bank through CCASS, subject to the terms of the agreement between Shareholders and their broker/custodian bank, or lodged with an Investor Participant Account with CCASS, instructions should be given to them to authorise HKSCC to take the necessary action on or before the deadline set by HKSCC.
		An acceptance, once submitted, cannot be withdrawn at least until Monday, 27 April 2009 (being the 21st day from the Closing Date), after which time an acceptor would have the right to withdraw but only until such time as the Offer has become or been declared unconditional as to acceptances.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our recommendation with regard to the Offer, we have taken into account the following principal factors and reasons:

1.		Background to and reasons for the privatisation of NTEEP
		NTEEP Group is principally engaged in manufacturing and marketing of consumer electronic and communication products (“CECP”), telecommunication component assembly (“TCA”) and liquid crystal display products (“LCDP”).
		The performance of the Shares has lagged the Hang Seng Index, hampering the fund raising ability of NTEEP. The Board of NTEI is of the opinion that one of the main purposes of maintaining NTEEP as a listed company in Hong Kong is compromised. We note that NTEEP has not raised new money from the equity capital market since its listing in 2004. The privatisation will enable NTEI simplify its corporate structure, reduce administration time and costs and can save significant resources of NTEI on listing compliance and investor relations in Hong Kong. On the other hand, the Offer gives the Independent Shareholders an opportunity to realise their investments in NTEEP at a price significantly above both the current market price and its net asset value per Share.
		NTEI has confirmed that, upon privatisation of NTEEP, it does not intend to introduce significant change to the existing operations, business, management and directorship of NTEEP, including the continued employment of all employees and any redeployment of the fixed assets of NTEEP.

LETTER FROM SOMERLEY

		NTEI is a company incorporated under the law of the British Virgin Islands with limited liability and its subsidiaries are principally engaged in electronics manufacturing and provision of design services with a worldwide coverage of customers.
2.		Business and prospects of NTEEP Group
		The business of NTEEP commenced in 1989 as a 70% joint venture company of NTEI. In 1992, NTEI acquired the remaining 30% equity interest from its joint venture partner and NTEEP became its wholly-owned subsidiary until NTEEP’s floating on the Main Board of the Stock Exchange in 2004. Since then, NTEI has remained the controlling shareholder of NTEEP, and held 660,215,470 Shares, representing approximately 74.88% of the entire issued share capital of NTEEP as at the Latest Practicable Date. In October 2005, NTEI proposed a privatisation of NTEEP by way of a voluntary conditional general cash offer which eventually lapsed due to the 90% acceptance condition not being met. NTEEP Group has undergone a reorganisation in December 2007 (the “Reorganisation”) which involved the acquisition of TCA and LCDP segments and the disposal of NTEEP’s software development business. NTEEP’s operations are now divided into three segments being CECP, TCA and LCDP.
		NTEEP Group has grown to become a well - established vertically-integrated manufacturing solutions provider for some of the world’s leading brand owners of CECP. Products of NTEEP Group include mobile phone accessories, home entertainment devices, educational products, optical devices, telecom liquid crystal display modules and telecom flexible printed circuit (“FPC”) modules. It has established a sales network covering North America, Europe and Asia Pacific. NTEEP Group has a very strong client base including Sony Ericsson Mobile Communications AB, Texas Instruments Incorporated, Sony Computer Entertainment Europe Ltd. and GN Netcom A/S.
		NTEEP Group has factory premises in Baoan, Shenzhen PRC, with a total area of approximately 51,800 square metres. Construction of a new production facility in Wuxi for the manufacturing of FPC boards and other component subassemblies was completed in the second quarter of 2008 and production is targeted to commence by early to mid-2009.
		As set out in the 2008 results announcement of NTEEP dated 9 February 2009 (“2008 Results Announcement”), NTEEP continues to experience weaker demand across all its product segments under the global economic downturn. To minimise the impact of the expected declining sales in 2009, the management has to reduce costs. Headcount was cut by about 27% from 9,700 as at the end of the third quarter of 2008 to 7,100 by the end of 2008. In order to retain cash, the Board of NTEEP has deter mined not to declare dividends for 2008. NTEEP has also postponed its expansion plans for new factories until at least mid-2009.

LETTER FROM SOMERLEY

		NTEEP is conservative about product demand and expects further declines in revenue which may result in losses from operations in 2009. On the other hand, NTEEP plans to expand its market share in targeted areas through strengthening its sales force and customer and technical support by establishing local sales and support offices in Japan and Taiwan.
		The electronic manufacturing services industry (“EMS”) is comprised of companies that manufacture electronic products and their components for consumer electronic product manufacturers in the electronics industry. According to iSuppli Applied Market Intelligence, whose research has been widely quoted by market practitioners, conditions in the global electronics contract manufacturing businesses are continuing to deteriorate under the world-wide recession and the weakening high-tech industry. As long as the recession persists in the United States and other markets, end markets will likely be mired in demand softness. As illustrated in the chart below, the estimated global EMS revenue would decrease by 12% from US$177.4 billion in 2008 to US$156.1 billion in 2009 and is then expected to creep to US$160.8 billion by 2012. Over the five-year period from 2007 to 2012, the EMS revenue is estimated to have a negative compound annual growth rate of 2.9%.

	Source:		iSuppli Applied Market Intelligence released in February 2009
	Note:		We have reviewed a number of news articles and journals published in 2009 in relation to EMS revenue forecast. Those market researches have similar view as iSuppli. The report released by iSuppli in February 2009 is the most updated forecast we have identified.

LETTER FROM SOMERLEY

3.		Past results of NTEEP Group
		A full statement of the financial results of NTEEP Group with accompanying notes is set out in Appendix I to the Composite Document, to which Independent Shareholders’ attention is drawn.
		Consolidated income statement
		The following table summarises the audited financial results of NTEEP Group for the three years ended 31 December 2008:

		For the year ended 31 December
		2008				2007				2006
		US$’000				US$’000				US$’000
		(Audited)				(Audited)				(Audited)
Revenue			622,561				283,760				178,322
Gross profit			74,023				48,843				30,126
Gross profit margin			11.9	%			17.2	%			16.9	%
(Loss)/profit before tax			(118,639	)			66,397				17,535
(Loss)/profit attributable to equity holders of NTEEP			(121,934	)			60,859				17,329
(Loss)/earnings per Share (US cents)			(13.83	)			6.90				1.97
Dividends (US cents)			—				5.13				—
Dividend payout ratio			N/A				74.3	%			0	%

NTEEP Group recorded a turnover of approximately US$283.8 million in 2007, representing a growth of about 59.1% when compared to 2006, which was mainly driven by the increase in sales of mobile phone accessories and home entertainment devices. Gross prof it margin also improved slightly from 16.9% in 2006 to 17.2% in 2007. The substantial increase in prof it before tax from US$17.5 million in 2006 to US$66.4 million in 2007 was mainly due to one-off gains arising from its divestment of securities in April 2007 and the disposal of two subsidiaries in December 2007 which generated a disposal gain of US$43.8 million and US$8.4 million respectively.

LETTER FROM SOMERLEY

		Excluding such one-off gains, NTEEP Group would have recorded a profit before tax of US$14.2 million, representing a 18.9% fall from US$17.5 million for 2006. Such a decrease was mainly due to the impairment loss on goodwill of US$24.3 million which arose from the acquisition of software development business in 2005.
		Following the completion of the Reorganisation on 31 December 2007, the results of TCA and LCDP businesses acquired were consolidated into the accounts of NTEEP for 2008. Revenue increased substantially by 119.4% from US$283.8 million in 2007 to US$622.6 million in 2008. However, the gross profit margin narrowed to 11.9% in 2008 from 17.2% in 2007, and NTEEP recorded a loss before tax of US$118.6 million, representing its first loss since listing in 2004. The net loss is after the impairment loss of US$143.6 million in relation to goodwill arising on the acquisition of two subsidiaries under the Reorganisation in 2007 and the impairment loss of US$1 million on intangible assets. Excluding such impairment losses, NTEEP would have recorded a profit after tax of US$22.7 million.
		The Directors determined not to declare dividends for 2008 (which would have been payable in 2009) in order to maintain cash reserves during the continuing economic turmoil. The Directors expect that as the economic downturn continues or worsens, revenue in the near-term will decline and losses from operations during periods in 2009 could result. Therefore, it is unlikely, in our view that, generous dividend will be declared in the near future.
4.		OFFER PRICE COMPARED TO EARNINGS
		According to the audited financial results of NTEEP Group as set out in Appendix I to the Composite Document, NTEEP Group recorded a net loss attributable to Shareholders of US$121.9 million (equivalent to approximately HK$950.8 million) for the year ended 31 December 2008 after recognising impairment losses on goodwill and intangible assets of US$143.6 million and US$979,000 respectively. As an illustration, after adding back these non-recurring items, the adjusted earnings of NTEEP would be as follows:

		2008
		US$’000
Audited net loss after tax for the year			(121,934	)
Add back: Impairment loss on goodwill			143,570
Impairment loss on intangible assets			979
Adjusted net profit (the “Adjusted Net Profit”)			22,615

LETTER FROM SOMERLEY

		Based on the Adjusted Net Profit for the year ended 31 December 2008 of US$22.62 million (equivalent to approximately HK$176.40 million) and the 881,670,588 Shares in issue as at the year-end date and the Latest Practicable Date, basic earnings per Share were US$0.026 (equivalent to approximately HK$0.20). On this basis, the Offer price of HK$1.5 represents a price-earnings ratio (“PER”) of 7.5 times.
		The chart below shows how the PER of the Shares has varied from 1 January 2006 up to 31 December 2008. The average PER for 2006 was 5.80 times. It rose significantly during the first quarter of 2007, the market price of the Shares rising in line with the movement of the overall stock market. The average PER was 10.55 times for 2007. The PER dropped sharply in the first quarter of 2008 on the basis of the improved earnings per Share for the year ended 31 December 2007. Following the financial tsunami, the Share price was on a downward trend and the PER fell during second quarter to fourth quarter of 2008. The average PER of the Shares was 2.39 times for 2008.

Source: Bloomberg

LETTER FROM SOMERLEY

5.		NET ASSETS VALUE AND ENTERPRISE VALUE OF NTEEP GROUP
		The following table summarises the balance sheet of NTEEP Group as at 31 December 2008, which is set out in full in Appendix I to the Composite Document:

		31 December
		2008
		US$’000
		(Audited)
Property, plant and equipment			137,015
Goodwill			74,437
Intangible assets			4,325
Inventories			27,300
Trade and other receivables			108,180
Bank balances and cash			129,349
Trade and other payables			(121,063	)
Loan from NTEI
— current portion			(51,905	)
— non-current portion			(259,525	)
Other net assets			1,322
Net assets value as at 31 December 2008			49,435

 

LETTER FROM SOMERLEY

The table below shows the enterprise values of NTEEP Group based on the closing price of the Shares on the last trading day (“Last Trading Day”) before publication of the Offer announcement on 24 February 2009 and the Offer price for Offer Shares:

						Enterprise
						value based
		Enterprise				on the closing
		value based on				price of the
		the Offer price				Shares on the
		for the Offer				Last Trading
		Shares				Day
		US$’000				US$’000
Market Capitalisation			169,552				64,430
Add:
Debt			311,430				311,430
Less:
Bank balances and cash			(129,349	)			(129,349	)
Enterprise value			351,633				246,511
Premium over the Last Trading Day			105,122
			42.6	%

Property, plant and equipment accounted for the biggest portion of NTEEP Group’s assets as at 31 December 2008, which comprised principally its production facilities in the PRC. A surplus on valuation of HK$337.9 million arose as the difference between the net book value of NTEEP Group’s share of property interests as at 31 December 2008 of HK$400.8 million and the valuation of such interests at the same date at HK$738.7 million by LCH, an independent professional valuer. We are informed by the management of NTEEP that the property, plant and equipment are stated at cost in accordance with the accounting policy of NTEEP Group, therefore such surplus has not been included in NTEEP Group’s financial statements in accordance with its accounting policy. Your attention is drawn to the valuation report prepared by LCH of the properties of NTEEP Group as at 31 December 2008 which is set out in Appendix III to the Composite Document. According to “Asia Marketview Quarter 4 2008” released by CB Richard Ellis, industrial property market in the PRC was inactive during the forth quarter of 2008 and industrial land value and rental generally revised downwards. Fluctuation in the market value of NTEEP Group’s property interests in the future, in our view, would affect the asset backing of each Share.

 

LETTER FROM SOMERLEY

		Goodwill of US$218 million arose from the Reorganisation in 2007. During the year ended 31 December 2008, NTEEP Group recognised an impairment loss of US$143.6 million since the operating profits and cash flows of the TCA and LCDP segments acquired under the Reorganisation were lower than expected amid the global financial meltdown. The goodwill is subject to regular impairment assessment. If the earnings forecast of the TCA and LCDP segments continues to fall so that their recoverable amount falls below their carrying value at the date of the impairment assessment, further write-offs in goodwill would be required.
		Based on the financial information of NTEEP Group as set out in Appendix I to the Composite Document, NTEEP Group had a gearing ratio of approximately 368% as at 31 December 2008, calculated as net borrowings (total borrowings net of cash) over shareholders’ equity and minority interests. The debt represented the interest-bearing loan from NTEI of approximately US$311.4 million which was used to settle the consideration for the acquisition of the TCA and LCDP businesses as par t of the Reorganisation. The loan is unsecured, bears interest at a fixed rate of 3.9% per annum and is repayable over 12 annual instalments. As mentioned in the 2008 Results Announcement, NTEEP suffers under the economic slowdown. Its net cash generated from operating activities in 2009 will be much lower than that in 2008. Even if no dividend is paid in 2009 and expansion projects are postponed, NTEEP believes its cash flow will become very tight. Consequently, NTEEP may need to seek consent from NTEI to revise the repayment schedule.
		NTEEP had a market capitalisation of approximately US$64.4 million based on the closing price of the Shares on the Last Trading Day of HK$0.57, and an enterprise value of approximately US$246.5 million which is smaller than the NTEI loan of US$311.4 million. The Offer price gives NTEEP an enterprise value of US$351.6 million, representing a 42.6% premium over the enterprise value based on the closing price of the Shares on the Last Trading Day.
		Based on the audited consolidated net assets of NTEEP Group as at 31 December 2008 of US$49.4 4 million (equivalent to approximately HK $385.59 million) and the 881,670,588 Shares then in issue, the book value per Share as at 31 December 2008 amounted to HK$0.44. On this basis, the Offer price represents a price to book ratio (“PBR”) of approximately 3.41 times. In assessing the terms and the Offer, we consider it relevant to review the latest valuation of the assets of NTEEP Group. We have assessed the net assets of NTEEP Group by taking into account the excess of the fair value of NTEEP Group’s share of property interests as at 31 December 2008 over their net book value as at the same date of HK$337.9 million arising as a result of the independent valuation conducted by LCH.

 

LETTER FROM SOMERLEY

						Per Share
						HK$
		HK$ million				(Note 1)
Audited net assets value as at 31 December 2008			385.59				0.44
Add back: Surplus arising on the revaluation of NTEEP Group’s property interests as at 31 December 2008 (Note 2)			337.9				0.38
Reassessed net assets value (“Reassessed NAV”)			723.49				0.82
Value of the issued Shares at the Offer price of HK$1.5			1,322.51				1.50
Premium of Offer price over Reassessed NAV			599.02				0.68
Percentage premium over Reassessed NAV			83	%			83	%

Notes:

As shown in the above table, the Offer price of HK$1.5 per Share values NTEEP at a premium of HK$599.02 million (approximately 83%) over the Reassessed NAV of HK$0.82 per Share. EMS is not an asset based industry and hence valuation on net asset value basis may not be very meaningful. We consider an electronic manufacturing services company such as NTEEP is more appropriately valued by reference to earnings and market price of Shares, and the net assets value is of subsidiary importance in assessing the Offer.

 

LETTER FROM SOMERLEY

6.

Historical market price and liquidity of the Shares

	(i)		Share price since listing
			The following charts below illustrate the performance of the Shares against the Hang Seng HK SmallCap Index (“HSSCI”) and the movement of the closing price for the Shares since the commencement of trading of the Shares on the Stock Exchange on 28 April 2004 up to the Latest Practicable Date:

Source: Bloomberg

Source: Bloomberg

 

LETTER FROM SOMERLEY

			NTEEP went public on 28 April 2004 by listing on the main board of Stock Exchange at an initial public offering price of HK$3.88 per Share. The Share closed at HK$3.40 on the first trading day. As shown in the first chart above, the performance of the Shares lagged behind HSSCI since its listing. The Share price closed at HK$0.57 on 20 February 2009, representing a decrease of approximately 83.2% from its first trading day. During the same period, HSSCI has decreased by approximately 32.0% from 1,646.73 points on 28 April 2004 to 1,120.01 points on 20 February 2009.
			The Share price showed a general downward trend since June 2005 and remained below HK$1.5 during most of the period from August 2005 to April 2007.
			Following the release of NTEEP’s 2007 annual results on 4 February 2008 which recorded a 251% growth in profit to approximately US$60.9 million when compared to 2006, the Share price surged 11.9% to HK$1.79 on 4 February 2008. The global stock markets continued to be affected by the turmoil in the US financial market. The HSSCI dropped by approximately 57.7% from 2,741.69 on 4 February 2008 to 1,159.09 on 9 February 2009. During the same period, closing price of the Shares fell by approximately 60.9% from HK$1.79 to HK$0.7.
			On 9 February 2009, NTEEP released its 2008 Results Announcement with a net loss of approximately US$121.9 million as compared to a net profit of approximately US$60.9 million in 2007. The share price of NTEEP dropped by 17.1% from HK$0.7 on 9 February 2009 to HK$0.58 on 10 February 2009.
			From the chart shown above, the closing price of the Shares has been below the Offer price since 5 August 2008. Conditions in the stock market and financial market have changed very substantially in the past fourteen months. At the beginning of 2008, the HSSCI was 3,178.98 points, approximately 183.8% higher than its close of 1,120.01 points on 20 February 2009. After the publication of the announcement of the Offer on 24 February 2009, the Share price rose by 124.6% from HK$0.57 on 20 February 2008 to HK$1.28 on 24 February 2008 and the Share price closed within the range of HK$1.28 and HK$1.42 up to the Latest Practicable Date.

 

LETTER FROM SOMERLEY

The Offer price of HK$1.50 per Share represents:

	(a)		a premium of approximately 163.2% over the closing price of HK$0.57 per Share as quoted on the Stock Exchange on 20 February 2009, the Last Trading Day;
	(b)		a premium of approximately 158.6% over the average closing price of HK$0.58 per Share as quoted on the Stock Exchange over the last 10 trading days up to and including 20 February 2009;
	(c)		a premium of approximately 123.9% over the average closing price of HK$0.67 per Share as quoted on the Stock Exchange over the last 30 trading days up to and including 20 February 2009; and
	(d)		a premium of approximately 138.1% over the average closing price of HK$0.63 per Share as quoted on the Stock Exchange over the last 90 trading days up to and including 20 February 2009.

	(ii)		Trading volume of the Shares from 1 January 2008 to 28 February 2009
			The chart below shows the monthly trading volume of the Shares from 1 January 2008 up to 28 February 2009:

Source: Bloomberg

 

LETTER FROM SOMERLEY

The following table sets out the monthly trading volume of the Shares on the Stock Exchange as compared to the issued Shares of NTEEP and to NTEEP’s public float for the period commencing from January 2008 to February 2009:

										Monthly
						Monthly				trading volume
		Monthly				trading volume				to the total
		trading volume				to public float				issued Shares
		Number of				%				%
		Shares				(Note 1)				(Note 2)
2008
January			4,628,000				2.10				0.52
February			8,792,363				3.99				1.00
March			10,982,000				4.66				1.25
April			6,765,000				2.87				0.77
May			12,761,000				5.42				1.45
June			10,526,000				4.61				1.19
July			6,029,000				2.64				0.68
August			3,690,000				1.67				0.42
September			1,987,000				0.90				0.23
October			3,742,000				1.70				0.42
November			4,542,878				2.06				0.52
December			4,316,000				1.96				0.49
2009
January			10,292,000				4.67				1.17
February			36,830,117				16.70				4.18

Notes:

LETTER FROM SOMERLEY

The monthly trading volume of the Shares during the period from January 2008 to January 2009 was relatively thin with its highest recorded in May 2008, representing approximately 1.45% of the total issued Shares of NTEEP or approximately 5.42% of the Shares held by the public. In our view, this level of liquidity would not be sufficient for the Independent Shareholders to sell significant numbers of their Shares in the market without a substantial discount to the market price of the Shares. The Offer represents an opportunity for Independent Shareholders to dispose of their entire holdings at the Offer price if they so wish. Since the Announcement Date, the trading volume of the Shares has increased significantly and the monthly trading volume in February 2009 represents approximately 4.18% of the total issued share capital of NTEEP or approximately 16.70% of the Shares held by the public. Based on trading volume over the last year as a whole, it is not likely in our opinion that the relatively active trading volume recorded in this period will continue if the Offer lapses.

7.		Comparison with Comparable Companies
		We have identified six companies (“Comparable Companies”) listed on the Stock Exchange which are principally engaged in the manufacturing of consumer electronic products and have their production in the PRC. The Comparable Companies we selected have a market capitalisation of over HK$450 million as at the Latest Practicable Date, which we consider to be a size comparable to NTEEP.
		The following table sets out the comparison of the Offer price in terms of PER and PBR to those of the Comparable Companies:

		Closing share				Market
		price				Capitalisation
		HK$				HK$ million				PER				PBR
Company		(Note 1)				(Note 2)				(Note 3)
Foxconn International Holdings Limited (2038)			2.47				17,442				3.09				0.67
VTech Holdings Ltd (303)			28.75				7,068				4.12				1.98
Truly International Holdings Limited (732)			3.99				1,887				2.68				0.62
Alco Holdings Limited (328)			1.13				629				2.97				0.40

LETTER FROM SOMERLEY

		Closing share				Market
		price				Capitalisation
		HK$				HK$ million				PER
Company		(Note 1)				(Note 2)				(Note 3)				PBR
Wong’s Kong King International (Holdings) Limited (532)			0.67				495				4.47				0.42
Varitronix International Limited (710)			1.48				479				1.83				0.32
Average for all companies											3.19				0.74
NTEEP @ Offer price (Note 4)			1.50				1,323				7.5				1.83

Source: Bloomberg

(i)		PER
		As shown in the above table, the PER of 7.5 times represented by the Offer price is higher than the PER of all the Comparable Companies which lies in the range of 1.83 to 4.47 times with an average of 3.19 times.
(ii)		PBR
		As reflected in the above table, typical EMS manufacturers listed in Hong Kong are trading at PBR of less than 1 time, except for VTech Holdings Ltd which is currently trading at an PBR of 1.98 times. The PBR represented by the Offer price of 1.83 times is higher than the PBR of most of the Comparable Companies and above the average PBR of 0.74 times.

LETTER FROM SOMERLEY

	8.		Comparison with privatisation precedents in Hong Kong
			We have also compared the Offer to other privatisation proposals in Hong Kong. Set out in the table below are all privatisation precedents involving companies listed on the Stock Exchange announced since 1 January 2007 and up to the Latest Practicable Date (the “Privatisation Precedents”). Independent Shareholders are reminded that the following Privatisation Precedents are for reference purposes only. Given the Privatisation Precedents may be conducted under different market conditions and the companies involved operate in different industry sectors, the premiums or discounts of offer or cancellation consideration of the Privatisation Precedents may be different from that of the Offer.

								Premium/(discount) of offer/cancellation
				Offer/				price over/(to) the average share price
Date of initial				cancellation				prior to announcement of privatisation
announcement		Company		price				1 month				3 months				6 months				Result
13 February 2007		Asia Satellite Telecommunications Holdings Limited (1135)			18.30				32.13	%			30.25	%			34.26	%		Failed (Note 1)
9 March 2007		Tom Online Inc. (8282)			1.52				16.92	%			5.56	%			11.76	%		Successful
16 April 2007		ABC Communications (Holdings) Limited (30)			0.58				29.51	%			34.60	%			28.52	%		Failed
19 April 2007		Shimao International Holdings Limited (649)			1.05				47.89	%			43.84	%			41.89	%		Successful
14 June 2007		Chia Hsin Cement Greater China Holding Corporation (699) (Note 3)			2.26				18.32	%			44.87	%			58.04	%		Successful
7 December 2007		Lei Shing Hong Limited (238)			10.00				37.36	%			53.61	%			75.44	%		Successful
13 February 2008		Pacific Century Premium Developments Limited (432)			2.85				23.38	%			16.33	%			15.38	%		Failed
28 February 2008		Mirabell International Holdings Limited (1179)			6.00				15.61	%			18.34	%			19.52	%		Successful

LETTER FROM SOMERLEY

								Premium/(discount) of offer/cancellation
				Offer/				price over/(to) the average share price
Date of initial				cancellation				prior to announcement of privatisation
announcement		Company		price				1 month				3 months				6 months				Result
2 June 2008		Wing Lung Bank Ltd (96)			156.5				7.92	%			22.99	%			43.48	%		Successful
2 June 2008		China Netcom Group Corporation (Hong Kong) Limited (906) (Note 3)			27.87				14.13	%			19.46	%			18.14	%		Successful
10 June 2008		CITIC International Financial Holdings Limited (183) (Notes 2 & 3)			7.50				41.24	%			61.99	%			64.84	%		Successful
3 September 2008		China Huiyuan Juice Group Limited (1886)			12.20				179.61	%			160.83	%			131.57	%		Pending
4 November 2008		PCCW Limited (8) (Note 2)			4.50				36.36	%			2.04	%			(2.81	)%		Pending
25 November 2008		Natural Beauty Bio-Technology Limited (157)			1.20				(10.45	)%			(14.89	)%			(21.57	)%		Failed
3 December 2008		GST Holdings Limited (416)			3.38				107.36	%			64.88	%			47.60	%		Pending
22 December 2008		Shaw Brothers (Hong Kong) Limited (80)			13.35				73.5	%			54.0	%			(4.5	)%		Successful
17 February 2009		Crocodile Garments Limited (122)			0.40				94.77	%			94.53	%			76.33	%		Pending
12 March 2009		Delta Networks, Inc. (722)			1.83				48.18	%			67.86	%			36.79	%		Pending
Average (Note 5)									48.48	%			46.82	%			46.90	%
24 February 2008		NTEEP			1.50				133.28	%			134.07	%			106.57	%

LETTER FROM SOMERLEY

1.		The privatisation of Asia Satellite Telecommunications Holdings Limited failed as the United States Department of State did not approve the proposed privatisation, which was one of the conditions precedents to such privatisation proposal.
2.		The offer price of the privatisation proposal of the respective company was revised upwards after the initial announcement. The computation above is based on the revised offer price.
3.		The offer in the privatisation proposal of the respective company consisted of share exchange offer or cash plus share exchange offer. The computation above was based on, among other things, the closing price of the respective shares to be exchanged (if they were publicly listed) before the initial announcement of the privatisation proposal.
4.		The selection criteria for the above privatisation precedents include all privatisation proposals (i) by way of scheme of arrangement; and (ii) by way of voluntary general offer with acceptance condition of at least 90% and intention to exercise compulsory acquisition if such offer becomes unconditional. As such, the privatisation of BALtrans Holdings Limited, which was privatised by way of voluntary general offer with acceptance condition of at least 50% only, is not included.
5.		In calculating the average premium of the offer/cancellation price to the share price for the Privatisation Precedents, we have taken out those offers which offer prices are at discounts to the market prices of the shares.

DISCUSSION AND ANALYSIS

The business of NTEEP was founded in 1989 and NTEEP itself was listed on the Stock Exchange in 2004. It has grown to become a well-established vertically-integrated manufacturing solutions provider with a global customer base. However, the market environment for EMS remains challenging and the Board of NTEEP expects competition to get stiffer. Market statistics also indicate that the industry would record a negative growth in the near term. The gross profit margin for 2008 of NTEEP narrowed to 11.9% from 17.2% in 2007.

NTEEP has experienced its first loss since listing in recording a net loss after tax of approximately US$121.9 million (approximately HK$950.8 million) for the latest financial year ended 31 December 2008. However, excluding non-recurring items in connection with the impairment losses on goodwill and intangible assets of a total of US$144.6 million (approximately HK$1,127.9 million), NTEEP would have booked a net profit after tax of US$22.7 million (approximately HK$177.1 million), equivalent to an earnings per Share of approximately HK$0.20 per Share. The Offer price represents a PER of about 7.5 times to the adjusted earnings per Share.

LETTER FROM SOMERLEY

The Board of NTEEP determined not to declare dividends for 2008 in order to maintain cash reserves during the continuing economic turmoil. Having considered the competitive market conditions faced by NTEEP in the EMS and the global economic downturn, it is uncertain whether there would be any dividend payout in the near future.

NTEEP has not raised new money from the equity capital market since its listing in 2004. We do not consider it favourable to the Shareholders for further shares to be issued at the persistent low rating at which the Shares have been traded since the beginning of 2008.

The share price of NTEEP has largely underperformed the market when compared to the HSSCI. The Offer price represents a 158.6% premium to the 10 days’ average price before the Offer was announced. The Shares have been trading below the Offer price since 5 August 2008. In addition, the volume of trading in the Shares has been low, with monthly trading generally less than 6% of the free float of the Shares. Consequently, we consider that the terms of the Offer, through which Independent Shareholders are able to dispose of their whole holding of Shares at a substantial premium to recent market prices, represents a good opportunity for Independent Shareholders to realise their investment on an attractive basis.

The Offer price of HK$1.5 represents a premium of approximately 83% over the Reassessed NAV per Share of approximately HK$0.82. This Reassessed NAV includes the appraised value of HK$738.7 million of NTEEP Group’s properties as at 31 December 2008, representing a revaluation surplus of HK$337.9 million over the carrying value of the properties. We consider such premium is favourable as most Comparable Companies are valued at a discount to their respective book value under current market conditions. For reference purposes only, the premium offered by the Offer price also compares favourably with the Privatisation Precedents in 2007 and 2008.

OPINION AND ADVICE

Based on the above principal factors and reasons, we consider the terms of the Offer are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to accept the Offer.

Yours faithfully, for
and on behalf of
SOMERLEY LIMITED
Maggie Chan
Director

APPENDIX I		FINANCIAL INFORMATION OF NTEEP

1.		THREE-YEAR FINANCIAL SUMMARY
		Set out below is a summary of the audited consolidated profit and loss accounts of the NTEEP Group for each of the three years ended 31 December 2008. The auditor’s reports in respect of the NTEEP Group’s audited consolidated financial statements for each of the three years ended 31 December 2006, 2007 and 2008 did not contain any qualifications. There were no extraordinary items and exceptional items in respect of the summary of the consolidated income statement of the NTEEP Group for each of the three years.

Financial Summary
For the three years ended 31 December

		2008				2007				2006
		US$’000				US$’000				US$’000
		(Audited)				(Audited)				(Audited)
Turnover			622,561				283,760				178,322
(Loss)/profit before income tax of NTEEP Group			(118,639	)			66,397				17,535
Income tax expense of NTEEP Group			(3,295	)			(5,655	)			(214	)
(Loss)/profit attributable to equity holders of NTEEP			(121,934	)			60,859				17,329
Minority Interests			—				(117	)			(8	)
Dividends
Interim dividend			—				11,303				—
Final dividend proposed after the balance sheet date			—				33,910				—
Dividends per share			—			5.13 US cents					—
(Loss)/earnings per share		(13.83) US cents				6.90 US cents				1.97 US cents

APPENDIX I		FINANCIAL INFORMATION OF NTEEP

2.		AUDITED ACCOUNTS OF THE NTEEP GROUP FOR THE YEAR ENDED 31 DECEMBER 2008
		Set out below is the audited consolidated financial statements of the NTEEP Group as at 31 December 2007 and 2008 together with the relevant notes, as extracted from the results announcement of NTEEP dated 9 February 2009.

Audited Consolidated Income Statement
For the Year Ended 31 December 2008
(In Thousands of US Dollars, except as other wise stated)

		Notes				2008				2007
Revenue							622,561				283,760
Cost of sales							(548,538	)			(234,917	)
Gross profit							74,023				48,843
Investment income							3,627				3,609
Other income							5,248				6,125
Other expenses							—				(1,275	)
Impairment loss on intangible assets							(979	)			—
Impairment loss on goodwill							(143,570	)			(24,340	)
Gain on disposal of businesses							—				8,289
Gain on disposal of available-for-sale investments							—				43,815
Selling and distribution costs							(8,913	)			(2,849	)
Administrative expenses							(24,761	)			(11,652	)
Research and development expenditure							(10,823	)			(4,144	)
Finance costs							(12,491	)			(24	)
(Loss) profit before tax							(118,639	)			66,397
Income tax expense			5				(3,295	)			(5,655	)
(Loss) profit for the year			6				(121,934	)			60,742
Attributable to:
Equity holders of the Company							(121,934	)			60,859
Minority interests							—				(117	)
							(121,934	)			60,742
Dividends (Note)			7				33,910				11,303
(Loss) earnings per share for (loss) profit for the year attributable to equity holders of the Company — basic and diluted			8			(13.83) US cents				6.90 US cents

Note:		The dividends paid in 2008 were in relation to the 2007 dividends.

APPENDIX I		FINANCIAL INFORMATION OF NTEEP

Audited Consolidated Balance Sheet
As at 31 December 2008 and 31 December 2007
(In Thousands of US Dollars, except as other wise stated)

						31 December				31 December
		Notes				2008				2007
										(Restated)
Non-current assets
Property, plant and equipment							137,015				118,934
Prepaid lease payments							15,489				15,083
Goodwill							74,437				218,007
Deferred tax assets							868				755
Deposits paid for the acquisition of equipment							2,936				536
Intangible assets							4,325				7,300
Other assets							320				357
							235,390				360,972
Current assets
Inventories							27,300				32,598
Trade and other receivables			9				108,180				101,494
Prepaid lease payments							344				143
Taxation recoverable							—				5,407
Entrusted loan receivable							8,199				—
Bank balances and cash							129,349				154,236
							273,372				293,878
Current liabilities
Trade and other payables			10				121,063				125,719
Taxation payables							850				390
Unsecured bank borrowings — due within one year							—				5,470
Loan from ultimate holding company — due within one year							51,905				25,953
Amount due to ultimate holding company							12,146				—
Entrusted loan payable							8,199				—
							194,163				157,532
Net current assets							79,209				136,346

APPENDIX I		FINANCIAL INFORMATION OF NTEEP

						31 December				31 December
		Notes				2008				2007
										(Restated)
Non-current liabilities
Deferred tax liabilities							5,639				5,901
Unsecured bank borrowings — due after one year							—				1,558
Loan from ultimate holding company — due after one year							259,525				285,477
							265,164				292,936
Net assets							49,435				204,382
Capital and reserves
Share capital							1,131				1,131
Reserves							48,304				203,251
Equity attributable to equity holders of the Company							49,435				204,382
Minority interests							—				—
Total equity							49,435				204,382

APPENDIX I		FINANCIAL INFORMATION OF NTEEP

     Notes to the Consolidated Financial Statements