Shenguan () : Announces 2015 Annual Results-Net Profit Amounts to RMB 291 million with Solid Financial Position Focus on Health Industry Development for Product Diversification

Shenguan [For immediate release]

Shenguan Holdings (Group) Limited Announces 2015 Annual Results * * * Net Profit Amounts to RMB291 million with Solid Financial Position Focus on Health Industry Development for Product Diversification

(18 March 2016 - Hong Kong) - Shenguan Holdings (Group) Limited ("Shenguan Holdings" or the "Company", together with its subsidiaries, the "Group", HKEx stock code: 829), the largest enterprise utilizing collagen in China, today announces its annual results for the year ended 31 December 2015 (the "Year").

Revenue decreased by 24.8% to approximately RMB1,054.6 million in 2015 from approximately RMB1,403 million in 2014. The gross profit margin decreased from 54.9% to 44.2% in 2015. Profit attributable to owners of the Company declined by 46.8% to approximately RMB291.4 million in 2015 from approximately RMB547.5 million in 2014. By excluding the effect of the increase in expenses on the net profit of the Group including loss on disposal of fixed assets, loss on foreign exchange and amortization of technology which were included in administrative expenses, profit attributable to owners of the Company in 2015 declined by approximately 39.9% from 2014. Earnings per share was RMB8.87 cents. The Board of directors proposed a final dividend of HK$3.2 cents per share.

The decrease in revenue was mainly due to the slow growth in China's food industry, together with different levels of decline in the output of low-temperature products of domestic meat products enterprises, resulting in a decrease in the overall sales volume of the Group. Moreover, the increase in the sales by foreign sausage casing suppliers to the Chinese market to take advantage of the depreciation of the European and Japanese currencies, and the sales at low prices by local small-scale collagen sausage casing manufacturers, which led to the decline in both the overall product price in the industry and the average price of the Group's products.

The Group took active measures to minimize the impacts of the difficult operating environment. Meanwhile, it also consolidated its business strengths during this low period and invested in new drivers for the long-term development. Besides clearance of old-aged inventories and products produced by the old method through promotional activities during the Year, the Group adopted a series of counter measures and has made certain progress, particularly, in lowering costs, adjusting the production according to the seasons to reduce the energy consumption, raising the level of mechanization to save labor force and monitoring the credit of the customers closely. All these have enabled the Company to maintain a stable position in production, business operation and liquidity.

In addition, in view of the development expectation of sausage casing market, the Group conducted a due analysis and research and confirmed the broad application prospect of collagen thus decided that in the coming five to ten years, the Group would base on the application of collagen technologies, and with a focus on the health industry for development, to promote the project construction for the industrial chains steadily and proactively investigate the application of new collagen technologies in new areas.

The Group has made significant progress in product chain development and business diversification during the Year through a number of acquisitions of collagen application, and it is commencing the application of collagen technology in various areas including medications, beauty, food and health care products. Among them, in respect of medications, the Group acquired 51% equity interest of Guangdong Victory, and hence the

Shenguan Holdings (Group) Limited Announces 2015 Annual Results

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technology of producing medical grade collagen materials in the second half of the Year. The collagen wound dressing produced by Guangdong Victory is undergoing clinical trial and its inner body hemostatic cotton is under application for clinical trial.

The Group also attained progress in product development and technology application. New products including collagen food products are currently under product testing, compiling product standard and marketing strategy planning. It is expected to be available for sales in 2016. In addition, the Group's new collagen skincare products developed by Nanning Nuyou and Guangxi Luxianna are currently under trial production and marketing strategy planning, and will also be available for sales in 2016.

Looking forward to 2016, the Group will focus on the strategy of "de-stocking, lowering costs and maintaining quality", and strengthen the development which creates the Group's own management model, and a sales and marketing system and enhances its leadership in the collagen sausage casing market, and implement its development on innovation.

Meanwhile, the Group will capitalize on its core collagen technology and with a focus on the health industry for the development to transform and upgrade through product diversification. The Group will make use of the Group's collagen processing technology to develop and produce collagen powder and collagen food products; and will develop and produce collagen based skincare products through Guangxi Luxianna and Nanning Nuyou. For medical grade collagen products, the Group's 51-percent owned subsidiary - Guangdong Victory is already capable of and possesses the permits for producing medical-grade collagen raw materials. The Group will enhance the efforts in marketing and promotion, expand the sales of medical collagen raw materials, push the clinical tests for the products such as collagen wound dressing and inner-body hemostatic cotton, and seek to obtain the production permits as soon as possible. For medical products, the Group will expand capability of its existing production lines through Sanjian Pharmaceutical to achieve a certain production scale.

Ms Zhou Yaxian, the Group's chairman, concluded, "We are confident that the Group's various measures will continue to boost the sustainable development of the Group, promote the development of collagen sausage casing business, and further widen the technological application of collagen, so as to provide a solid start and foundation for the thirteenth Five Year Plan, and also maximizing shareholders' return in the long run."

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About Shenguan Holdings

Shenguan Holdings (HKEx stock code: 829) is the largest enterprise utilizing collagen in China, specializing in the manufacture and sale of edible collagen sausage casing products. As at 31 December 2015, the Group owns three production bases in the districts of Fudian, Wangfu and Sifu in Wuzhou, Guangxi. The Group is listed on the Main Board of The Stock Exchange of Hong Kong Limited.

For further information, please visit Shenguan Holdings' website: http://www.shenguan.com.cn/

For further inquiries, please contact: Y Communications

Charis Yau / Michael Yau

Tel: (852) 2254 8848/ (852) 2254 8853

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Email: cyau@ycom.hk / myau@ycom.hk