Optimizing role of providing all-encompassingservices for paper-making industry

Sharingand working together for win-win results

ResultHighlights

• Revenueincreased by 47.1% to approximately RMB612.1 million
• Gross profitand net profit reached approximately RMB137.3 million andRMB47.9 million, respectively,representing a y-o-y increase of 49.9% and 57.8%, respectively
• New contract value increased by more than 51.4% to approximatelyRMB1,141.3 million
• Synergygrowththrough the acquisition of the headbox
• Optimized therole of providing all-encompassing services as provision for a breakthroughfor the environmental business,involving reverse hanging membranesealing and deodorization for the sewage tank of a paper-making plant, and aRDF product project
• Began to deliversupply chain financing services to the paper-making companies in March 2018
• The Board recommends the payment of a final dividend of 3.0 HK cents per share.

Financial Highlights

HONG KONG, CHINA - Media OutReach - 21 September 2018 - HuazhangTechnology Holding Limited ("Huazhang" and its subsidiaries, together, the"Group", stock code: 1673) announced its annual results for the year ended 30 June 2018 ("the yearunder review") today. TheGroup's revenue for the year underreview amounted to approximately RMB612.1million (the year ended 30 June 2017: RMB416.0 million), representing an increase of 47.1%. Profit attributable to owners of theparent increased by approximately 57.6% to RMB48.3 million (the year ended 30 June 2017: RMB30.6 million). Non-GAAP profit for the year amounted toapproximately RMB56.7 million,representing an increase of 49.0%.

The Board recommends the payment of afinal dividend of3.0 HK cents per share. The Group haspaid final dividends every financial year from 2014, with payout ratios at around40%.

Business Review

Duringthe year under review, the paper-making industry continued to benefit from anarray of economic and environmental reform and development policies of theChinese government. The demand-supply relationship further improved and theprices of paper-making rose. The paper-making industry in China reaped a bumperharvest. The Group actively facilitated the corporate affairs as well asbusiness by upholding the policy principles of "New Huazhang, New Development,New Dream" and creating a new vision of "Integrating Together, CreatingTogether, Generating Profits Together". TheGroup played the role of providing all-encompassing services to maximize theinterests by sharing, creating together and working together for win-winsituation. For the year ended 30 June 2018, the Group recorded a turnover and profitof approximately RMB612.1 million and approximately RMB47.9 million,respectively, representing an increase of approximately 47.1% andapproximately 57.8% as compared with the same period in2017. The Group's new contract value increased by more than 51.4% toapproximately RMB1,141.3 million.

Duringthe year under review, revenue from sales of industrial products increased byapproximately 57.8% toapproximately RMB121.7 million. Revenue from project contracting servicesremain decreased by 8.3% to approximately RMB215.9 million.Revenue from sales of environmental business was increased by 105.3% toapproximately RMB99.8 million. Revenue from provision of supporting servicesincreased by approximately 218.6% to approximately RMB174.7million.

"IntegratingTogether" -- optimize the role of providing all-encompassing services for thepaper-making industry

During theyear, the Company continued to integrate suppliers and service providers fromall sectors of the paper-making industry, and optimized the role of providingall-encompassing services for the papermaking industry through the acquisitionof the headbox and logistics businesses. In September 2017, the Group completedthe acquisition of Hangzhou MCN Paper Technology Co., Ltd. and Hangzhou HaorongTechnology Co., Ltd. (together, the "MCN Group"). MCN Group owns patents andknow-how in the headbox production. In November 2017, the Group completed theacquisition of Fu An 777 Logistics Limited ("777 Logistics", together with itssubsidiaries, collectively known as the "777 Logistics Group"). The 777Logistics Group is principally engaged in the logistics and warehousebusinesses, and has established a logistics and warehouse centre in YangjiangCity, Guangdong Province, China, which officially commenced operation from July2018. To optimizethe role of providing all-encompassing services, the Group worked together witha software company to launch an information-based project, so as to integratedesign and production for transparent management.

"CreatingTogether" -- create new opportunities for development

The Groupworked together with suppliers and service providers to create newopportunities for development. Taking the headbox business as an example, itsheadbox products maintained advantages in the sector of printing paper,specialty paper and household paper by relying on the technology and serviceadvantages of the MCN Group. The Group even succeeded in introducing itsheadbox in the market for packaging paper to strengthen its advantages. Duringthe year, in addition to delivering the previous businesses for sludgetreatment products and wastewater treatment, the Group also undertook a projectinvolving reverse hanging membrane sealing and deodorization for the sewagetank of a paper-making plant, and a RDF product project for a paper-makingplant. Upon completion of these projects, the Group possessed the technology insolving the odor problem of paper-making plants and in converting waste residuefrom paper-making as raw materials into fuel rods. These projects weredemonstration projects of the Group and can be further promoted to existingcustomers in the future. Moreover, the Group began to deliver supply chainfinancing services to the paper-making companies in March 2018 to assist themin sourcing raw materials and to provide financing services through the Group'splatform and its close relationships with suppliers.

During theyear, the overseas business division of the Group actively explored theoverseas markets. In the second half of 2017, the Group secured a mastercontractor contract in respect of slurry, flowing white water recovery systemand automation equipment for the 250,000 tons paper machine project of apaper-making plant in Vietnam. In the past year, the Group's sales personnelvisited a lot of customers in overseas countries or invited overseas customersto conduct site visits to the Company. The Group believes that the overseasmarkets are full of opportunities. For the year ended 30 June 2018, the newcontract value of the overseas business division was RMB 5.6 million.

"Generatingprofits together" -- collaborate for common benefits

The Groupcreated common benefits by working with all parties to optimize its role ofproviding all-encompassing services. During the year, the Group's new contractvalue increased by more than 51.4% to approximately RMB1,141.3 million, thanksto the contribution by the headbox business, in addition to the market boom.For the year ended 30 June 2018, revenue from industrial products increased byapproximately57.8% to RMB121.7, of whichrevenue from the headbox business was approximately RMB32.1 million. Moreover,in terms of project contracting services, with the efforts made by the Groupover the past few years, it manages to undertake projects with increasingdegree of complexity and increasing contract value. For the year ended 30 June2018, the new contract value of major projects was RMB794.4million, an increaseof 55.1% over 2017. For the year ended 30 June 2018, the new contract value ofenvironmental products was RMB 102.5 million, an increase of 27.1% over 2017.

Looking ahead, Mr. Zhu Gen Rong, the chairman of Huazhang Technology Holding Limited, said, "We expect the paper-making industryis expected to continue its positive momentum, while themarket demand for papermaking equipment will keep increasing. The Group isconfident in and capable of playing a good role of providing all-encompassingservices for the industry by recommending quality equipment suppliers tocustomers through the platform of Huazhang Technology. We will step up effortsin innovation as well as research and development, enabling "Made in China" toinclude more China created elements and rely more on Chinese equipment andChinese brands, so that China will become one of the nations that providescomplete equipment for the paper-making industry. We will seize theopportunities and challenges encountered by the paper-making companies, maketimely response to the new direction of "Integrating Together, CreatingTogether, Generating Profits Together" with appropriate adjustment ofstrategies so as to take the lead in the market and deliver sustainablebusiness growth for creating more values for all parties."

About Huazhang Technology HoldingLimited

HuazhangTechnology Holding Limited is an integrated service provider in paper-makingindustry and its principal business includes project contracting service,research and development, manufacture and sale of industrial automationsystems, sludge treatment products and headbox, and after-sales and add-valued services.The Group has been in the paper-making industry for over 17 years. The Group'sself-manufacturing system and equipment are custom-built in accordance with thespecifications and requirements provided by the Group's customers, whichinclude various papermaking enterprises in the PRC. The group strives to becomea leading solution provider and comprehensive service provider for thepapermaking industry in the PRC.