Profit Increased by 56.6% y-o-y to RMB105.3 million

Results Highlights

• Revenue increasedby 7.8% to RMB917.5million y-o-y

• Profit for theperiod increased by 56.6% to RMB105.3 million y-o-y

• Recommended thepayment of an interim dividend of RMB0.0181 per ordinary share

Financial Highlights

During the periodunder review, the Group continued to expand its business and dedicate to buildChina's most valuable natural health food brand. The Group sells its products through an extensivenetwork of offline concessionary counters as well as online channels. Absoluteamounts of revenue generated from sales through offline and online channelscontinued to increase as compared to the corresponding period in 2018, while thepercentage of revenue generated from sales through online channels to totalrevenue increased from 17.8% for the six months ended 30 June 2018 to 20.3% forthe Period.

Business Review

Increasein product iterations and revenue contribution from new products

Leveragingits research and development capabilities and market leading position to growits business and broaden its customer base , the Group has expanded its product offeringsand launched 17 popular natural healthy food products during the Period,including various healthy tea bags and congee. The increase in productiterations has also promoted the sales of the Group's existing products as wellas attracted new customers who are interested in trying the Group's new naturalhealth food products. As a result, the Group had attracted more than 22.8million registered members as at 30 June 2019.

Optimizingoffline sales network and expand online presence

Regarding the offline channels, as at 30 June 2019,the Group operated 3,454 concessionary counters in supermarkets in around 300cities across China. During the period, the Group has upgraded over 300existing concessionary counters to a new type of integrated health food stores,which are designed to sell selected health food products, in order to improvethe in-store consumer experience and satisfy additional demands. Furthermore,the Group launched its "sales partnership programme" in September last year,which is in expectation to provide further incentives to the sales personneland in turn increase its sales revenue. As at 30 June 2019, the sales partnership programmewas carried out in over 400 concessionary counters.

Regarding the online channels, the Group continuedto expand online presence, and experienced a significant growth. Revenueincluding the sales of third-party brand products generated from onlinechannels, represented an increase of approximately 23.8% year on year. As theGroup's first online platform, Tmall flagship store remained a significantrevenue contributor to the Group for the six months ended 30 June 2019, withrevenue of RMB92.1 million, representing an increase of 30.3% year on year. The Group also continued to enhancemembership services and interactions with its fans through its WeChat memberstore to further promote customer loyalty and encourage customers to purchase.As at 30 June 2019, the Group had approximately 7.6million followers on itsWeChat official account.

Developingproduction and R & Dcapacity to meet the increasing demand

In view of the increasing demand of natural food inChina and the overloaded capacity of its production facilities, in March 2018,the Group commenced construction of the first phase of its new manufacturingfacility in Nansha County, Guangzhou. The new production facility has a totalgross floor of approximately 60,000 square metres and is expected to be completedconstruction by the end of 2019. After the completion, the Group's estimatedmaximum production capacity will increase to 40,000 tons per year.

In the area of research anddevelopment, the Group continued to follow the market-oriented approach and iscurrently in the process of broadening its product offerings to includegrain-based meal replacements, grain-based health snacks and grain-relatedhealth supplements. In addition, the Group continued to pursue cooperation withselected universities and research institutions to enhance its capability forinnovation. In particular, he Group jointly launched "Wugu Mofang GrainNutrition Research Centre" （五谷磨房穀物營養研究中心） withChinese Nutrition Society （中國營養學會） in 2018to conduct further research on nutrients of natural grains. As at 30 June 2019,the Group had completed the development over 180 new products that areavailable for mass production.

Looking ahead, Mrs.   GUIChangqing, Chairlady and Executive Director of Natural FoodInternational Holding Limited ,said, " benefiting from the growingpurchasing power and rising health awareness of Chinese consumers, we remainfull of confidence about our future. Recently, PepsiCo became the company'ssecond largest shareholder. We believe that through strategic cooperation withPepsiCo, we will further expand market share and brand influence, and alsoenjoy greater growth potential. Strategically, we will further enhanceintegrated distribution platform and optimize channel mix, expand and diversifyproduct portfolio, strengthen brand equity and enhance operational efficiency.The Group will continue to maintain and strengthen our leading market positionand create more values for our shareholders."

About the Group

Natural Food International Holding Limited isthe second largest natural health food company in China according to Frost& Sullivan. The company successfully listed on the Main Board of the StockExchange of Hong Kong Limited in 2018, and generated an annual revenue ofRMB1,818 million last year. Its brand "Wugu Mofang"(五谷磨房) ranked first in terms oftop-of-mind brand awareness and customer satisfaction among all the naturalhealth food brands in China and as the most frequently consumed brand among allthe natural health food products in China. Infused with modern nutritionscience and food processing technologies, their diversified product portfolioincludes over 100 types of products.