Following the trend of lightweight vehicles in the automotive industry

Developing support measures for new energy vehicles

Result Highlights

•       Revenue increased by 6.2% to approximatelyRMB339.9 million
•       Gross profit and net profit reached approximatelyRMB103.1 million and RMB49.4 million, respectively, representing a y-o-y increase of 9.5%and 17.6%,respectively
•       Salesfrom cylinder blocks reached RMB288.0 million, representing a y-o-y increase of9.7%
•       Added a low-pressure casting production line fordesign and manufacturing of lightweight and high-quality castings of new energyvehicles, which is expected to officially commence operation in January 2019
•       Carrying out research and development on 6 productsto meet future development opportunities of new energy vehicle business
•       Conducted new investment and transformation of atotal of 4 production lines
•       Interimdividend of HK6.85 cents per share

FinancialHighlights

HONGKONG, CHINA - MediaOutReach - 31 August 2018 - Ruifeng Power Group Company Limited ("Ruifeng Power"or the "Company" and its subsidiaries, together, the "Group", stock code: 2025.HK),a Chinese leading specialized manufacturer of cylinder blocks (a majorstructure in automobile engines), announced its interim results for the sixmonths ended 30 June 2018("the period under review") today. The Group's revenue for the period under reviewamounted to approximately RMB339.9 million (the six months ended 30 June 2017: RMB319.9 million), representing anincrease of 6.2%.Total comprehensive income attributable to equity shareholders of the Companyincreased by approximately 16.5% to RMB48.9 million (the six months ended 30 June 2017: RMB42.0 million). Grossprofit increased 9.5% to RMB103.1 million,while gross profit margin increased to 30.3% (the six months ended 30 June 2017: 29.4%).

The Directors declared an interim dividendof HK$6.85 cents per share for the six months ended 2018 (six months ended 30 June 2017: Nil).

Business Review

The automobileindustry in China has exhibited stable growth in the first half of 2018. Accordingto the data published by China Association of Automobile Manufacturers, in thefirst half of 2018, the production volume of China's passenger and commercialvehicles increased by approximately 3.2% and approximately 10.6% y-o-y. Under the pressure of the double-credit-point policy, which wasannounced in the first half year of 2018, automotive companies are alreadyriding the wave of comprehensive planning for new energy vehicles, and it isalso the trend of the times. In addition, in May 2018, the Ministry of Financeof the PRC officially announced that since 1 July 2018, the import tariffs onfinished vehicles and parts have ushered in major adjustments. This adjustment will bring new challenges and opportunities for Chinesecar companies and auto spare parts manufacturers.

During the period under review, the Group has seized the developmentopportunities of the automobile industry and achieved sustained growth, creatingdesirable return for shareholders. In the first half of 2018, the Grouprecorded sales revenue and profit of approximately RMB339.9 million and RMB49.4million respectively, representing an increase of approximately 6.2% and 17.6%respectively over the same period last year. Among which, sales from cylinderblocks reached RMB288.0 million, representing a y-o-y increase of 9.7%, whilesales volume was 315,361; sales from cylinder heads reached RMB34.6 million,while sales volume was 58,874; sales from ancillarycylinder block components reached RMB17.4 million, representing a y-o-yincrease of 47.7%.

Improvement ofCasting Technology

In order to realize cost advantages and quality assurance, the Groupcontinued to strengthen its precision casting production lines. During theperiod under review, the Group's investment in precision casting productionlines of RMB5.0 million was mainly used to add a low-pressure casting production linefor design and manufacturing of lightweight and high-quality castings of newenergy vehicles for production of aluminum cylinder block products. Theproduction line is expected to officially commence operation in January 2019,which would enable the Group to further control the cost and quality ofaluminum product production and enhance the competitiveness of the Group inaluminum products. Meanwhile, the rough cast products produced by the Groupused in the production of cylinder blocks represented 72.3% of the totalcylinder blocks the Group produced, a significant increase from 40.0% in thesame period of last year. This helped improve the profitability of the Group.

New Energy VehicleBusiness

The implementation of the double-credit-point policy by the Ministry ofIndustry and Information Technology of the PRC would accelerate the industrydevelopment of pure electric vehicles and plug-in hybrid electric vehicles andthe Group has taken actions in response to the demand. Since 2017, the Grouphas launched 2 cylinder blocks for commercial vehicles, 4D30 and VM2.5, whichmeet the new China VI emission standards. With an aim to further follow thetrend of lightweight vehicles in the automotive industry, the Group hasinvested in rough cast aluminum casting production lines for future productionof lightweight cylinder blocks and cylinder heads. Currently, the Group iscarrying out research and development on 6 products to meet future demand. TheGroup has been seeking to develop new energy vehicle business and explore thepossibility of developing spare parts for pure electric vehicles, includingselecting suitable companies or partners for investment so as to achieve commondevelopment.

New Production Line

During the period under review, the Group has strengthened communicationand cooperation with customers. In addition to the consolidation of theexisting customer base, the Group continued to develop new businesses,including new investment and transformation of a total of 4 production lines.As at 30 June 2018, the Group owned and operated a total of 3 precision castinglines and 19 mechanical processing lines, including 15 for cylinder blocks, 2for cylinder heads and 2 for other ancillary cylinder block components.

Looking ahead,Mr. MengLianzhou, the chairman of Ruifeng Power Group Company Limited,said, "In the first half year of2018, despite the continuous introduction of new policies in the automobilemarket and the challenges of electric vehicles for traditional vehicles, westill adheres to customer-oriented and technology-oriented strategies, continuouslyimproving its comprehensive competitiveness and providing high-quality servicesfor traditional car companies. At the same time, the Group is graduallydeveloping support measures for new energy vehicles while accurately graspingmarket trends, and improving production efficiency through internaltechnological transformation. By enhancing our core competence, the Group willcreate more value for shareholders. "

About RuifengPower Group Company Limited

Ruifeng Power Group Company Limited is aspecialized manufacturer of cylinder blocks, a major structure in automobile engines,based in China. The Company ranked fourth among specialized cylinder blockmanufacturers in China in terms of sales volume in 2016, according to the Frost& Sullivan Report. Ruifeng Power is also an established producer ofcylinder heads. The size of its operations and significant production capacityallow the Company to take on some of the leading automobile manufacturers inChina, including Jiangling Motors, Beiqi Foton Motor, Jiangxi Isuzu, JAC Motorsand Great Wall Motors. The Company was among the first few automobile enginespare part manu-facturers in China to adopt the intelligent manufacturinginitiatives. The production facilities and processes afford it a high level offlexibility to meet the diverse needs of its customers.