[For immediate release] Shenguan Holdings (Group) Limited Announces 2016 Interim Results * * * Maintains Market Share in the Collagen Casing Market Expands the Application of Collagen to the Health Industry

(19 August 2016 - Hong Kong) - Shenguan Holdings (Group) Limited ("Shenguan Holdings" or the "Company", together with its subsidiaries, the "Group", HKEx stock code: 829), the largest manufacturer of edible collagen sausage casing products in China, today announces its interim results for the period ended 30 June 2016 (the "Period").

In view of the pressure arising from decelerating economic growth and intensified competition in the collagen sausage casing market, the Group adopted various measures and maintained its market share in the collagen casing market. During the Period, the Group recorded an increase in sales volume but the overall revenue was affected as the Group actively cleared inventory by reducing price. Revenue for the Period was approximately RMB430.7 million, representing a slight decrease year-on-year of about 1.1 per cent from approximately RMB435.7 million in the first half of 2015.

Profit attributable to shareholders reduced by about 41.1 per cent to approximately RMB89.0 million. Excluding the non-cash effect arising from the amortization of technology knowhow that is attributable to shareholders to the net profit of the Group of RMB9.7 million, profit attributable to shareholder for the Period decreased by approximately 34.7 per cent. Earnings per share for the first half of 2016 was RMB2.73 cents.

During the Period, the Group adopted measures to increase energy saving and reduce energy consumption, raise the level of mechanization, save labor force and monitor the credit of the customers closely, which led to decrease in the overall operating costs and partially offset the decrease in gross profit margin, and enabled the Company to maintain a stable position in production, business operation and liquidity. However, gross profit margin decreased to approximately 33.5 per cent for the Period, as the Group reduced the average selling price to clear inventory.

After the completion of acquisitions of equity interests in several companies during 2015, the Group has expanded the application of collagen to the health industry and China's strategic emerging industry. Collagen food products are currently under product testing, compiling product standard and marketing strategy planning. They are expected to be available for sales in the market

in the fourth quarter of 2016. Meanwhile, new products of collagen skincare developed by the Group through Nanning Nuyou Health Care Products Company Limited and Guangxi Luxianna Biotechnology Development Company Limited are under trial production and marketing strategy planning, and the products are expected to be launched for sale in domestic market in the fourth quarter of 2016.

On 7 July 2016, a wholly-owned subsidiary of the Group acquired a property in Singapore for SGD16.1 million (approximately RMB79.7 million). The above transaction is expected to be completed on 25 August 2016. The Group plans to use the Property for research and development, production and sales of various new products.

Furthermore, the National Development and Reform Commission of China promulgated on 5 July 2016 the Catalogue of Key Products and Services in Strategic Emerging Industries (戰略性新興產業 重點產品和服務指導目錄) (2016 Edition, consultant paper). Various collagen products under development of the Group were included in this catalogue.

Looking forward to the second half of 2016, the Group will put effort to promote the clinical trial of biomedical materials including collagen wound dressing and collagen inner body hemostatic cottons, the Group will obtain production permits as soon as practicable. The Group will also accelerate the research and development of edible collagen supplements. Meanwhile, the Group will speed up the launch of collagen skincare products into the market and expand production of current pharmaceutical products through Sanjian Pharmaceutical to achieve production scale.

The Group will continue to maintain its focus on the strategy of "de-stocking, lowering costs and maintaining quality", strengthen its development of group management model and establishment of sales and marketing system, enhance its leadership in the collagen sausage casing market, as well as implement innovative development.

Ms Zhou Yaxian, the Group's chairman, concluded, "Despite the economic downturn, industry competition and various risks in the market, the Group is confident that the above measures will continue to boost the sustainable development of the Group, maintain its leadership in the collagen sausage casing market in China and further widen the technological application of collagen, hence maximizing shareholders' return in the long run."

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About Shenguan Holdings

Shenguan Holdings (HKEx stock code: 829) is the largest manufacturer of edible collagen sausage casing products in China, specializing in the manufacture and sale of edible collagen sausage casing products in China. As at 30 June 2016, 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 / Natalie Tang

Tel: (852) 2254 8848/ (852) 2254 8838

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

Shenguan Holdings (Group) Ltd. published this content on 19 August 2016 and is solely responsible for the information contained herein.
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