Shenguan : Announcement Profit Warning

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神冠控股（集團）有限公司

(Incorporated in the Cayman Islands with limited liability)

This announcement is made by the Company pursuant to Rule 13.09 of the Listing Rules and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance.

The Board wishes to inform the shareholders of the Company and potential investors that, based on the preliminary assessment by the Board of the unaudited consolidated management accounts of the Group and the information currently available to the Board, the Group is expected to record a decrease of approximately 50% in its net profit for the Reporting Period as compared to that for the same period in 2015.

This announcement is made by Shenguan Holdings (Group) Limited (the "Company", and together with its subsidiaries, the "Group") pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571, Laws of Hong Kong) (the "Securities and Futures Ordinance").

The board (the "Board") of directors (the "Directors") of the Company wishes to inform the shareholders of the Company and potential investors that based on the preliminary assessment by the Board of the unaudited consolidated management accounts of the Group and the information currently available to the Board, the Group is expected to record a decrease of approximately 50% in its net profit for the year ended 31 December 2016 (the "Reporting Period") as compared to that for the same period in 2015 (the "Previous Period").

Such decrease is primarily due to the following reasons:

1. During the Reporting Period, although the sales volume of collagen casings increased as compared to the Previous Period, the average selling price decreased due to the overall decline in prices of the products in this industry and the Group's endeavour to lower the inventory level. The decrease in average selling price caused a drop in the gross profit margin as compared to the Previous Period.

2. During the second half of 2015, the Group had acquired a technology knowhow through acquisition of a subsidiary and recognised goodwill as a result of such acquisition. During the Reporting Period, the amortization of the technology knowhow and the impairment of goodwill had caused a decrease in the Group's net profit. The amortization and the impairment had no effect on the cash flow of the Group.

3. Other factors that had caused the decrease of the Group's net profit included expenses incurred for development of new products and businesses during the Reporting Period.

The Board considers that although the Group had adopted strict cost control, strengthened its internal control, conducted research and development of new products and implemented strategies for product diversification, the Group still recorded a decline in its results for the Reporting Period because the meat products industry is undergoing an adjustment period and the product diversification is at its initial stage. However, the overall operations of the Group remain sound and intact. The Group's overall financial position also remains healthy.

The information contained in this announcement is only based on a preliminary assessment by the Board of the unaudited consolidated management accounts of the Group and information currently available to the Board. It is not based on any data or information that has been audited or reviewed by the auditor of the Company. The Company is still in the process of finalising the unaudited results of the Group for the Reporting Period, which will be disclosed in the forthcoming annual results announcement which is expected to be published in March 2017.

By Order of the Board

Chairman

Hong Kong, 9 January 2017

As at the date of this announcement, the executive Directors are Ms. Zhou Yaxian, Mr. Shi Guicheng, Mr. Ru Xiquan and Mr. Mo Yunxi; the non-executive Director is Mr. Low Jee Keong; and the independent non-executive Directors are Mr. Tsui Yung Kwok, Mr. Meng Qinguo and Mr. Yang Xiaohu.