Revenue increases 12.6% to RMB1.84 Billion

Gradual Results Delivered From Operational Reforms

Optimises Sales Channel Mix

Results Highlights

HONG KONG, CHINA - Media OutReach - 17 June 2020 - 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 annual results for the twelve months ended 31 March 2020 (the "Reporting Period"). The Group registered revenue of RMB1,841 million for the Reporting Period, representing year-on-year growth of 12.6%, while the net profit attributable to equity holders of the Group was RMB366 million. Basic earnings per share decreased by 14.9% to RMB6.25 cents. The Board of Directors has proposed to distribute 30% and 40% of the net profit attributable to equity holders for the twelve months ended 31 March 2020 as full-year dividend and full-year special dividend, respectively, representing a dividend payout ratio of 70% in aggregate.

Operational Highlights during FY2019/2020

• China Segment: Delivering Gradual Results While Optimising the Product Portfolio

With the completion of in-depth reform in channels, products and supply chain management, the Group's Kappa brand business has achieved initial success. During the Reporting Period, the Kappa brand continued to deepen collaboration with celebrities and key opinion leaders (KOL) in various sectors, such as entertainment, music and art. In the meantime, it also conducted a brand and image revamp, launching the new brand concept of "K is for Kappa".

In addition, the Group continued to optimise its channel and management, promote sales localisation reform and improve its offline store structure. Since the beginning of 2020, the Group has sustained stable growth for the existing outlet stores as well as the Shanxi-Shandong-Henan regions, while the performance of offline business in Central China, West China and South China has seen notable growth. For the e-commerce business, leveraging the segmentation of people and goods facilitated by online big data, the Group has built a sustainable (interactive) e-commerce sales network, resulting in consistent growth throughout the year.

During the Reporting Period, the Group continued to conduct its kid's wear business through the three main channels of shopping malls, department stores and outlets. In the meantime, the development of direct sales and e-commerce was enhanced to increase the percentage share of point-of-sale outlet stores, further uplift the Group's competitiveness in the kid's wear market. During the Reporting Period, revenue generated by the kid's wear business reached RMB8.8 million, accounting for 4.8% of the Group's revenue.

As at 31 March 2020, the Group had a total of 1,372 Kappa stores (including 243 Kappa Kid's stores), representing a net decrease of 132 stores as compared to that at 31 March last year (a net decrease of 80 Kappa stores and a net decrease of 52 Kappa Kid's stores). For the next step, the Group will further reduce the number of underperforming stores.

• Japan Segment: Ongoing Diversification of Consumers

Japan business continued to undergo reforms. During the Reporting Period, Japan segment recorded revenue of RMB301 million. Further to the upgrading of product designs, the Group took diversified marketing initiatives targeting the consumer trends and their sporting preferences, attracting market attention especially the younger generation. The Group also collaborated with Japanese football comics in organising events and sponsoring women sportswear in golf tournaments. Phenix's brand equity was further enhanced through a number of sponsorship events as well as marketing initiatives.

• Investment Segment: Sustaining a Prudent and Pragmatic Investment Strategy

During the Reporting Period, the valuation of the Group's investment portfolio showed steady growth. As at 31 March 2020, the Group reported a net asset value of RMB9,245 million for its investments, representing a 4.1% growth compared to 30 September 2019 and a 156.6% premium to the Group's market capitalisation for the corresponding period as at 31 March 2020. The Group's investment net gains for the Reporting Period amounted to RMB567 million. In the future, the Group will continue to control the size and risks of its investment funds in a prudent and pragmatic manner, so as to secure stable returns for shareholders while assuring the safety and effectiveness of its investments amidst uncertainties in the financial market.

Mr. Chen Yihong, Chairman and Executive Director of China Dongxiang, said, "Last year, the Group continued to optimise its store network and improve its store efficiency. We have adopted a dual mechanism of traditional e-commerce and e-commerce via social media in a move to diversify the consumption pattern. Our e-commerce business has sustained a general trend of sales growth in spite of the business doldrums caused by the pandemic. Looking forward, in the face of uncertainties, China Dongxiang will continue to uphold the traditional spirit of the Kappa brand and follow the stated path of reform and effective channel strategies. The Group will also engage in product innovation and upgrade in close tandem with the fashion trends of the market, and will dedicate to generate long-term and stable returns for its shareholders through prudent global deployment and investment."

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

China Dongxiang (Group) Co., Ltd. is a leading international sportswearbrand enterprise in China which has been listed on the Main Board of the HongKong Stock Exchange since 10 October 2007. The Group is primarily engaged inthe design, development, marketing and wholesale of branded sportswear inChina. Currently, China Dongxiang owns all rights to the internationallyrenowned Kappa brand in China, Macau and Japan. On 1 May 2008, China Dongxiangcompleted the acquisition of Phenix, a Japanese sportswear enterprise. Phenixis the most popular ski brand in Japan with the largest market share, as wellas a well-known brand in the international market.