China Display Optoelectronics Technology : ANNOUNCEMENT ON BUSINESS UPDATE FOR THE FIRST QUARTER ENDED 31 MARCH 2021

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China Display Optoelectronics Technology Holdings Limited

華 顯 光 電 技 術 控 股 有 限 公 司

(Incorporated in Bermuda with limited liability)

(Stock Code: 334)

ANNOUNCEMENT ON BUSINESS UPDATE

FOR THE FIRST QUARTER ENDED 31 MARCH 2021

This announcement is made by China Display Optoelectronics Technology Holdings Limited (the "Company", and together with its subsidiaries, the "Group"), pursuant to the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and Rule 13.09(2)(a) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

In order to further enhance the transparency of the Group and provide additional information with which shareholders of the Company and potential investors may better appraise the recent business development and financial position of the Group in a timely manner, the board (the "Board") of directors of the Company (the "Directors") would like to provide an update to its shareholders and potential investors on certain unaudited financial and operating data of the Group for the three months ended 31 March 2021 (the "Review Period").

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BUSINESS REVIEW

In the first half of 2020, the global sales of mobile phones were hindered by the COVID-19 pandemic. As the pandemic was gradually contained domestically in Mainland China, the consumers' spendings have returned to a normal level, which allowed the Group to continue its growth momentum in the second half of 2020. During the Review Period, benefiting from the rebound of the demand in the mobile phone market, the Group's brand customers have actively placed orders. The Group achieved a total sales volume of 39.0 million units, representing a year-on-year growth of 92.1%, which drove the revenue to increase by 118.1% year-on-year to RMB1,675.3 million. Powered by the growth in the sales of A-Si products that have a high cost-performance ratio, the sales volume of the non-processing products has surged by 135.8% year-on-year to 16.8 million units, accounting for 43.0% of the total sales volume, of which the sales volume of laminated LCD module products increased by 153.0% year-on-year to 16.2 million units with the corresponding revenue increasing by 142.8% year- on year to RMB1,367.9 million. The sales volume of the processing products reached 22.2 million units, representing a year-on-year increase of 68.5%, with the corresponding revenue increasing by 79.0% year-on-year to RMB253.4 million. As the pandemic becomes the "new norm" globally, the market demand has shifted to products with a high cost-performance ratio. During the Review Period, the Group's overall average selling price slightly decreased by 3.8% year-on-year to RMB84.9 (excluding processing LCD modules).

Sales volume of the Group during the Review Period by product segments and their respective year-on-year changes were as follows:

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Revenue of the Group during the Review Period by product segments and their respective year-on-year changes were as follows:

OUTLOOK

Looking ahead, while there remain uncertainties in the international economic environment, the global smartphones industry shows signs of recovery as demand rebounds. According to the market research institution TrendForce, the total sales volume of smartphones is expected to increase by 9% year-on-year to 1.36 billion units in 2021.

The Group will strive to maximise its production efficiency and effectiveness, keep fulfilling the orders of first-tier customers and strengthen its customer base. Furthermore, the Group will capitalise on the replacement cycle of 5G smartphones and the growing trend of remote office and learning products to actively expand in the markets of smart-home and wearable products. Meanwhile, the smart factory of the Group for small-to-medium-sized LCD modules in Chenjiang, Huizhou, China has commenced construction in early April 2021 and is expected to be completed in May 2022. The new factory is expected to contribute to the expansion of the Group's production capacities for wearable and medium-sized display modules and further broaden its product range.

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In the long run, the Group remains cautiously optimistic about the development prospects of the display module business. It is confident that it will further enhance its strengths in technology and economies of scale by improving the industry value chain, so as to increase its competitiveness. The Group will strive to face various challenges while maintaining the balance between the growth in sales and steady development, as well as to create greater value for the Group and its shareholders.

LIQUIDITY AND FINANCIAL RESOURCES

The Group's principal financial instruments comprise cash and cash equivalents and interest- bearing bank loans. According to the unaudited financial statements, the Group's cash and cash equivalents balance as at 31 March 2021 amounted to RMB487.6 million, of which 57.7% was in Renminbi, 41.4% was in US dollar and 0.9% was in HK dollar. As at 31 March 2021, the Group's interest-bearing bank loans amounted to RMB94.8 million.

The Board wishes to remind shareholders of the Company and potential investors that the above financial and operating data are based on the Group's management accounts which have not been audited or reviewed by auditors. Accordingly, figures and discussions contained in this announcement should in no way be regarded as providing any indication or assurance on the financial results of the Group for the three months ended 31 March 2021. Shareholders of the Company and potential investors are cautioned not to place undue reliance on such data.

Shareholders of the Company and potential investors are advised to exercise caution when dealing in the shares of the Company.

On behalf of the Board

LIAO Qian

Chairman

Hong Kong, 26 April 2021

As at the date of this announcement, the Board comprises Mr. LIAO Qian as Chairman and non-executive Director; Mr. OUYANG Hongping, Mr. WEN Xianzhen and Mr. ZHANG Feng as executive Directors; and Ms. HSU Wai Man Helen, Mr. XU Yan and Mr. LI Yang as independent non-executive Directors.

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