Reform Management, Business Stable Growth and Maintain High Dividend Payout

Results Highlights

HONG KONG, CHINA - Media OutReach - 27 November 2019 - The leading international sportswear brand enterprise in the PRC, China Dongxiang (Group) Co., Ltd. ("China Dongxiang" or "the Company", together with its subsidiaries, "the Group", HKEx stock code: 3818) announces its interim results for the six months ended 30 September 2019 (the "Reporting Period"). The Group registered revenue of RMB899 million for the Reporting Period, representing year-on-year growth of 14.2%, while the net profit attributable to owners increased by 36.2% to RMB188 million. Basic earnings per share increased by 36.0% to RMB3.21 cents. The Board of Directors has proposed to distribute 30% and 20% of the net profit attributable to owners for the six months ended 30 September 2019 as interim dividend and interim special dividend, respectively, representing in aggregate a dividend payout ratio of 50%.

Operational Highlights during the Reporting Period

• China Segment: Reform Management and Business Stable Growth

During the first half of 2019, the brand enhanced its brand penetration in the fashion market as it promoted its brand substance and philosophy through cross-sector cooperation with celebrities and KOLs (key opinion leaders) in in various sectors, such as entertainment, music and art, in ongoing implementation of its integrated online and offline marketing strategy. During the Reporting Period, the Group announced the official appointment of celebrated artist Zitao Huang as its brand ambassador, and the brand embarked on a range of marketing activities focused on the ambassador. In the meantime, the Group hosted and participated in fashion extravaganzas and sponsored various sporting events, in a bid to increase its brand and product exposure and develop its brand assets. In addition, effects of the Group's optimisation and reform of channels have gradually become apparent. Strong sales growth was also reported at shopping malls channel, as ongoing improvements were being made to the overall offline store structure. In addition, the Group reported higher growth in overall performance of outlet stores. During the Reporting Period, thanks to the Group's implementation of a multi-platform strategy, sales through Tmall and JD.com continued to grow. Customers aged between 18 and 24 as a percentage of the brand's e-commerce customers increased by 16 percentage points to 50%.

During the first half of 2019, The Group's kids wear business continued to enhance its competitiveness in the kids wear market through complementary branding activities and store promotions. The "Chinese Football Boy" campaign remained a favourite of its fans, which attracted a huge following among the media and the public. Video clips of relevant events have also claimed more than 100 million clicks. For the Reporting Period, revenue generated by the kids wear business reached RMB52 million, accounting for 6.9% of the revenue from China segment.

As at 30 September 2019, the Group had a total of 1,461 Kappa stores (including 285 Kappa Kid's stores), representing a net decrease of 43 stores as compared to that as at 31 March 2019 (a net decrease of 33 Kappa stores and a net decrease of 10 Kappa Kids stores). For the next step, the Group will further reduce the number of underperforming stores.

• Japan Segment: Diversification of Customer Base

The Group's Japan business continued to undergo reforms. During the Reporting Period, revenue from the Japan segment was substantially in line with that for the corresponding period of last year. The Group organised numerous marketing activities tailored to the characteristics of local consumer spending in Japan, providing sponsorships to golfers in addition to hosting footballing activities, in a bid to maintain stable sales by raising consumer awareness for the brand and increasing the number of retail store visitors. Meanwhile, the Group placed a strong emphasis on online promotion via social media, with a view to broadening its reach to various customer groups and further enhancing its brand value.

• Investment Segment: Enhancing Cooperation and Investing with Prudence

Since 2019, under the background of the gradual cooling financial investment market and the increasing uncertainty of the project, the overall valuation of the Group's investment portfolio remains stable. The Group continued to monitor the size and risks of investment assets with a cautious and prudent approach. As of 30 September 2019, the Group reported a net asset value of RMB8,882 million for its investments, representing a 2.5% growth compared to 31 March 2019 and a 102% premium to the Group's market capitalisation for the corresponding period. The Group's investment net gains for the Reporting Period amounted to RMB166 million.

Mr. Chen Yihong, Chairman and Executive Director of China Dongxiang, said, "Despite ongoing volatility in the macro-market, the Group achieved stable growth in its Kappa brand business, thanks to efforts in new customer development and the introduction of the direct-franchise model which ensured sufficiency in product supply. China Dongxiang will uphold the traditional spirit of the Kappa brand and engage in product innovation and upgrade in close tandem with the fashion trends of the market, capitalising on sound opportunities in the sporting industry and making reasonable use of its resources to explore channels for brand promotion and marketing, bringing long-term reasonable stable and considerable returns to shareholders."

About China Dongxiang (Group) Co., Ltd. (Stock code: 3818)

China Dongxiang (Group) Co., Ltd. is a leadinginternational sportswear brand enterprise in China which has been listed on theMain Board of the Hong Kong Stock Exchange since 10 October 2007. The Group isprimarily engaged in the design, development, marketing and wholesale ofbranded sportswear in China. Currently, China Dongxiang owns all rights to theinternationally renowned Kappa brand in China, Macau and Japan. On 1 May 2008,China Dongxiang completed the acquisition of PHENIX, a Japanese sportswearenterprise. PHENIX is the most popular ski brand in Japan with the largestmarket share, as well as a well-known brand in the international market.