(Hong Kong; 26 February 2002) Chongqing TH Diwei Cement Company Limited (Diwei Cement), a jointly controlled entity under Shui On Construction and Materials Limited (SOCAM; HKSE stock code: 983), has commenced operation on its two newly completed rotary kilns. The 0.7-million tonne increase in high grade cement has raised Shui On's production volume in Chongqing to 3.5 million tonnes, further consolidating its leadership in the local high grade cement market. With existing production of 0.7 million tonnes in Guizhou, Shui On's total production volume of high grade cement in the central and western provinces now reaches 4.2 million tonnes. Upon completion of three new rotary kilns in Guizhou with production capacity of 1.2 million tonnes in the 2002-2003 financial year, Shui On's total high grade cement production volume in the western provinces will reach 5.4 million tonnes.

"The construction of massive infrastructure and residential projects in the central and western provinces will constantly bolster the demand for high grade cement. Most local cement plants can only produce low grade cement that are not suitable for these projects. However, it is not cost effective to import high grade cement from other provinces. Therefore, we decided to invest in this market in order to capture the huge potential," said Mr. Lawrence Choi, Managing Director of SOCAM. "Shui On focuses on acquiring operations that offer high quality and we also bring in advanced technologies and modern management methods. As a result, we have succeeded in raising the quality, production volume and cost effectiveness of the plants we have acquired. We are very confident of the cement market in the region and will therefore continue to expand in strategic locations in both Chongqing and Guizhou.

Shui On's operations in Chongqing began in 1995 when it formed Chongqing TH Cement, a 50/50 joint venture with the Lewis and Paul Group. The first rotary kiln constructed under the joint venture commenced operation in early 1998 and its annual production volume increased from 160,000 tonnes to 1 million tonnes within a year, thus becoming one of the three largest cement operations in Chongqing. In June 2001, TH Cement acquired 80% of Diwei Cement, the largest high grade cement producer in Chongqing. Diwei Cement's annual production volume has since then increased to 2.5 million tonnes of high grade cement, further consolidating TH Cement's leadership in the Chongqing market with combined annual production volume of 3.5 million tonnes, accounting for more than 70% of the local high grade cement market.

In Guizhou, Shui On has invested in four cement operations in Honghuagang and Xishui in Zunyi City in the north, Xingyi in Qianxinan in the southwest and Kaili in Qiandongnan in the southeast. With a current production volume of 700,000 tonnes of high grade cement per annum, Shui On is also constructing three new rotary kilns in Honghuagang, Xishui and Xingyi. When these new kilns, each with an annual production volume of 400,000 tonnes, are completed by the end of the 2002-2003 financial year, Shui On's total high grade cement production volume in Guizhou will reach 1.9 million tonnes.

SOCAM, a member of the Shui On Group, was listed on the Hong Kong Stock Exchange in 1997 and is engaged in construction, construction materials and property development in Hong Kong and the Chinese Mainland. Apart from SOCAM, the Shui On Group has a separate, non-listed property arm with investments in Shanghai, Hong Kong, Beijing, Guangzhou and New York.