O Net Technologies : Net&rsqu;s Prfit Attributable t Equity Hlders f the Cmpany Surged 63.8% t HK$73.7 millin - Slid Cre Technlgy Platfrm Set fr Lng-term Sustainable Grwth New Businesses Grw Steadily with Higher Grss Prfit Margin

Solid Core Technology Platform Set for Long-term Sustainable Growth New Businesses Grow Steadily with Higher Gross Profit Margin

(Hong Kong, 22 August 2017) - O-Net Technologies (Group) Limited ("O-Net" or the "Group") (stock code: 877), a leading high technology enterprise, achieved solid growth with highly profitable results for the six months ended 30 June 2017 ("1H2017" or "the review period").

During the review period, the Group reported a revenue of HK$880.9 million, representing an increase of 18.1% over the same period of last year. The increase in revenue was mainly attributable to the growth in revenue across all businesses, especially the new businesses contributed by the Group's "Diversify for Growth" strategy. Gross profit was up 33.8% to HK$317.8 million and the gross profit margin increased 4.3 percentage points to 36.1%, attributable to the margin increase in the optical networking business as well as the larger revenue contribution from the high margin new businesses. Consequently, the Group's profit attributable to equity holders of the company surged 63.8% to HK$73.7 million, and the Group's Non GAAP profit attributable to equity holders of the company soared to HK$82.9million.

Mr Austin Na, Chairman and CEO of O-Net, said, "I am delighted to see that our Group further accelerated the business growth during the period under review and delivered an outstanding performance across all businesses. Our optical networking business continued to perform well with our introduction of next-generation products and remained as one of the key growth drivers of the Group. Revenues from high margin new businesses such as automation, sensing and industrials, coupled with the coating business started to bear fruit with greater revenue contributions, proving our 'Diversify for Growth' strategy to be a success."

Business Review

Driven by the rapid expansion of 100GbE in the metro network in the telecommunications market and the establishment of 100GbE data centre, the global optical components market continued on an uptrend. Consequently, the Group's revenue from the optical networking business increased by 7.6% to HK$725.0 million in 1H2017. In particular, revenue from the data-communications segment increased by 19.6% to HK$210.9 million during the review period, contributing 29.1% to the total optical networking revenue. The increase was mainly attributable to the increase in sales of passive optical networking products in the data- communications market. Telecommunications, the core segment in the optical networking business had a revenue increase of 3.4% to HK$514.1 million for 1H2017, representing 70.9% of total optical networking revenue. This rise was not only attributable to the increase in sales of passive optical networking products but also the new revenue sources generated by sales of 100G active optical networking products.

The Group's advanced technological platforms enable it to deliver products and services to customers across different industries. During the period under review, the Group's automation, sensing and industrials business boasted sequential growth with revenue up 64.8% to HK$98.1 million, commanding a high gross profit margin of 47.6%.

1. Machine vision business

   Along with O-Net's introduction of a machine vision system in 2015, the Group continued to invest and expand product portfolios to cater for the strong demand in line with the "Made in China 2025" initiative of the Chinese Government. During 1H2017, the Group's machine vision system segment achieved solid growth of 41.7%, contributing HK$10.0 million in revenue to the automation, sensing and industrials business.

2. Automation solutions for E-cigarette business

   As a leading supplier for the E-cigarette industry, the Group continued to provide various automation solutions to several leading E-cigarette players in China and overseas. Its E- cigarette business outperformed the market growth and recorded a revenue of HK$27.1 million during the review period, up 37.0% over the same period of 2016.

3. Industrial Laser Business

   During 1H2017, the Group expanded its innovation and production capacities by offering a best-in-class 2 kilowatt laser engine and 6 kilowatt laser combiners, as well as discrete 3 kilowatt optical components by ITF Technologies ("ITF"), which enable the business to outperform the market. As a result, it has recorded a significant revenue growth of 66.6% to HK$54.5 million in 1H2017, thus reaffirming this segment's status as a growth driver for the Group.

4. Light Detection and Ranging Product ("LiDAR") Business

The Group's LiDAR module and its optical products for LiDAR have been qualified by a global technology giant and contributed revenue since the second half of 2016. Moreover, the Group is actively pursuing cooperation with other LiDAR players for securing additional customers. All of these efforts helped to further bolster the Group's position in this burgeoning business segment. Consequently, the LiDAR segment has generated HK$6.5 million in revenue for the automation, sensing and industrials business in 1H2017.

The Group's cutting-edge coating business, which provides anti-reflective, anti-fingerprint and colour lamination coating services, continued to enjoy enormous growth from the smartphone manufacturers particularly in China. During 1H2017, the business achieved revenue growth in multiples rising 340.4% to HK$57.8 million.

Prospects

Driven by the network infrastructure development especially the 100GbE metro network deployment, the telecommunications market is expected to further advance. On the other hand, the rising demand for web-scale data centres and data centre upgrading to 100GbE are expected to serve as catalysts in the data-communications market. With strong growth forecasted for the global telecommunications and data-communications markets, the Group has already taken measures to strengthen its position in both sectors. In particular, the Group is well on its way to introduce new iterations of advanced products to the market. Furthermore, the mini Integrated Coherent Receiver ("mini ICR"), 100GbE Active Optical Cables ("AOC") and

10 X 10 TOSA & ROSA products, having already been launched and qualified and commencing production in the second half of 2016, are proceeding with mass shipments in the second half of 2017.

The revolution of manufacturing and production industry brought about by the Industry 4.0 and the "Made in China 2025" initiatives will have a significant positive impact on the automation and digitalization market in the coming decade and beyond. Furthermore, the lagging behind of China's industrial production facilities will create an immense window of opportunity. Therefore, the Group will look to build on the successes achieved by its automation, sensing and industrials business by launching a new series of products for penetrating the intelligent, digital and networked manufacturing market in the coming years, positioning itself among the first automation solutions providers in the Industry 4.0 market.

Continue to Launch New Solutions for High Power Fiber Laser

Leveraging the Group's existing technology platforms and manufacturing capabilities, it's subsidiary, ITF will continue to develop and launch a broad range of fiber-based components and modules for fiber lasers - including high power fiber lasers. Coupled with the ongoing development and introduction of additional building blocks for multi-kilowatt fiber lasers, the Group is positioning itself as a key enabler in the transition of materials processing markets to the fiber laser sector to include metal cutting, welding, marking and engraving. On this front, the Group expects to continue to outpace the market growth rate and expand its scale of business.

LiDAR to Serve as an Additional Income Source Driving Future Growth

LiDAR is believed to be one of the most significant technologies to be used in ADAS and affecting the future evolution of the automobile. Underpinned by its own vertical integration, O- Net, along with ITF and 3SP, has embarked on development of the next generation LiDAR with a lower price point and planned to launch in 2H2017 which would make ADAS a more cost- effective proposition. The Group as one of the leading component suppliers of LiDAR, is confident that this business segment will serve as an additional revenue stream to drive its overall revenue growth in the coming years.

The Group seeks to capture business opportunities in the consumer electronics market by introduction of innovative high-growth products. Capitalizing on its cutting-edge coatings technology, the Group is striving to secure more new customers, including consumer electronics industries players, to eventually improve its overall profitability.

Mr Na concluded, "The Group's significant progress and efforts made in all of its business activities over the years bring it closer to the realization of its vision of becoming a high technology leader with a solid technological foundation for innovation. Looking ahead, the Group will continue to seize opportunities across the fast growing markets that further optimize the product value, elevate its market position and maintain sustainable growth in order to deliver favorable returns to our shareholders."

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About O-Net Technologies (Group) Limited (Stock code: 877)

O-Net Technologies (Group) Limited, with headquarter in Shenzhen, was listed on the Stock Exchange of Hong Kong Limited on 29 April 2010. It is a leading supplier of optical networking products to the global optical telecommunications and data-communications markets. To further strengthen the Group's leadership in the global technology industry, O-Net, along with 3SP and ITF, secures the supply of advanced laser chips and optical components in order to widen the Group's product range and improve its technologies through vertical integration. Riding on the Group's core optical networking technology platform, it has diversified from its core business to certain new businesses including automation, sensing and industrials, and has re-positioned its strategic focus from a sole telecom passive component supplier to a high technology leader with advanced products and solutions for cloud data centers, industrial laser, ADAS and consumer electronics markets with an aim to become a leading high-tech company.

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