China Sanjiang Fine Chemicals : ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2016

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中 國 三 江 精 細 化 工 有 限 公 司

(incorporated in the Cayman Islands with limited liability)

On behalf of the board (the "Board") of directors (the "Directors") of China Sanjiang Fine Chemicals Company Limited (the "Company"), I am pleased to announce the annual audited consolidated results of the Company and its subsidiaries (the "Group") for the year ended 31 December 2016.

We managed to achieve a turnaround in 2016 with substantial improvements in terms of a number of key indicators -gross profit margin, net profit margin and gearing although the crude oil pricing stayed hovering over a relatively low level in 2016 when comparing to the average level of the last five years. The Group achieved a net profit of approximately RMB552.6 million in 2016, an increase of approximately 479.8% when comparing to the net loss of RMB145.5 million in 2015, primarily attributable to the improvement of gross profit margin by 10.3%, representing a remarkable increment of gross profit margin from 3.3% in 2015 to 13.6% in 2016. We are taking a conservative view on the future movement of crude oil pricing, any movement of which, we believe, would have material impacts on the profitability of the oil and chemical sector (the "Sector") and of the Group and as such, the Board has recommended a final dividend of HK11.5 cents per share, representing a dividend payout ratio of approximately 18.4% on an annual basis for the year ended 31 December 2016 (the "year under review").

We consider the Group's turnaround in 2016 was primarily attributable to a number of factors:

1. Test-run costs during the ramp-up of a new production facility usually drags down the production efficiency. 2016 was the Group's first full-year operation after the ramp-up of the two major production facilities - the MTO Technology-based production facility ("MTO production facility") and the 5th phase ethylene oxide ("EO")/ethylene glycol ("EG") production facilities in Q2 and Q3 of 2015 respectively, which means 2016 was the Group's first full financial year having all major production facilities operated in a way they are designed and built up to be and having their production efficiencies fully reflected as all the test-run costs including raw materials, times and efficiencies lost during the course of starting up and fine tuning the facilities of the aforesaid two major production facilities have been fully reflected in 2015;

2. The Group implemented very rigorous measures during the course of executing and monitoring the construction and ramp-up of the aforesaid two major production facilities over the period from the tendering process of construction to commercial operation stage and I, myself, actively involved in every aspects during the whole process, which enabled to the Group to lower the capital expenditures as much as possible and we believe that kind of cost controlling measures provided the Group the competitive advantage and laid the groundwork to prepare for a turnaround when the macro environment of the Sector improves and to outrace other competitors in very tough years like in 2015;

3. The macro environment of the Sector has been improving since the Q2 of 2016 after the stabilization of crude oil pricing and a stable crude oil pricing would improve the market sentiments across the Sector and induce a stronger demand for crude oil-derivative products like ethylene, propylene, EO and EG as downstream producers are more willing to maximize their production capacities and increase the storage level for their finished goods after production if they have a clearer picture in terms of their own profitability, which would be materially deteriorated if crude oil pricing fluctuated substantially especially in 2015; and

4. We consider our remarkable strategic moves over the years have been proved to be the foundation for the Group to achieve the turnaround in 2016. We initiated a very significant strategic move

-developing a vertical-integrated production chain back to 2012. Before 2012, the Group's

business was very concentrated with approximately 90% of revenue coming from one single product -EO. We fully understand that it is a common phenomenon for the Sector that profitability of markets or levels among chemical production chain are cyclical in a timeframe of usually from five to ten years and shifting vertically among the chemical production chain in terms of high-profitability market and low-profitability market. We became aware of the shift of high-profitability market to ethylene level, the upstream level of EO, in 2012 and, to respond to the increase in market price of ethylene, we went upstream to acquire the Methanol-to-Olefin based and related ancillary technologies ("MTO Technology") and commenced the construction of the MTO production facility in 2012 and after the commercial operation of MTO production facility in Q2 of 2015, it enables the Group to shift its ultimate feedstock, from vertical integration perspective, to methanol (i.e. the downstream of coal or nature gas) from ethylene (i.e. the downstream of cruel oil) with the advantage of a more stable pricing of feedstock and opens up the opportunity for the Group to diversify its business into propylene-derivative products. We initiated to build up a polypropylene ("PP") production facility in 2015 after we noticed certain changes happened with the propylene and propylene-derivative markets in 2015, where propylene pricing has been suffering from the increase in supply from Propane Dehydrogenation ("PDH") since 2015 while the profitability of polypropylene producers reached a relatively high-end level in the last 5 years, which means the pricing of propylene-downstream products are relatively stable being regarded as a high-profitability market and being more involvement in propylene- derivative markets would enable the Group to capture the profits in those propylene-downstream

levels. The designed annual production capacity of the PP production facility is expected to be approximately 300,000 MT, which matches fully with the propylene output from MTO production facility and all the propylene that is required for the PP production purpose is expected to be able to source internally. After the commercial operation of PP production facility in Q3 of 2016, it has enabled the Group to bring the Group's propylene-line business on an integrated basis (i.e. propylene used to produce PP and then PP sales) back to a positive gross profit margin level, improving from gross loss margin of 10.6% in propylene sales business only to gross profit margin of 3.2% in propylene-line business on an integrated basis. As at 31 December 2016, we consider the Group has become a more diversified vertical-integrated chemical group with, based on our estimation, approximately 30%, 20%, 20% and 10% of revenue (on a gross and annual basis reflecting the outputs of major production facilities) coming from the top 4 lines of businesses namely EO, ethylene and propylene and PP respectively, which, we consider, is a more risk-balanced product mix.

During the year under review, revenue of the Group increased by approximately 33.8% when comparing to 2015, primarily resulted from: 1) the ramp-up of two major production facilities -the MTO production facility and the 5th phase EO/EG production facilities and put them into commercial operation in Q2 and Q3 of 2015 respectively, which led to the increase in revenue from C4 & C5 sales by approximately RMB183 million and increase in revenue from EG sales by approximately RMB560 million respectively, due to full-year effect in 2016; 2) the ramp-up of PP production facility and put it into commercial operation in Q3 of 2016, which led to the increase in revenue from PP sales by approximately RMB555 million; and 3) increase in average selling price of EO by approximately 17.6%, which led to the increase in revenue from EO sales by approximately RMB197 million. Net profit attributable to shareholders was approximately RMB552.6 million and basic earnings per share was approximately RMB56.09 fens, for the year ended 31 December 2016, representing increases of approximately 479.8% and 479.2% respectively as compared with 2015, which was primarily attributable to the improvement of gross profit margin by 10.3%, as a result of the combined effects of: 1) the increases in average selling price of ethylene-line businesses by more than 10% in average in 2016 when comparing to 2015; and 2) being more diversified vertical-integrated in 2016 when comparing to 2015 with more ethylene output from MTO production facility (i.e. ethylene output from MTO production facility -2016: 315K MT; 2015: 215K MT) being used to produce EO and EG and with more propylene being used to produce PP (i.e. propylene used to produce PP -2016: 83K MT; 2015: Nil) after the commercial operation of PP production facility in Q3 of 2016. We expect the Group's gross profit margin will have an upside in 2017 as more propylene will be used to produce PP internally as a result of the full-year effect of the ramp-up of the PP production facility in Q3 of 2016.

Going forward, we will continue to pursue our established well-formulated strategies by being a more diversified vertical-integrated chemical group and we will keep assessing our product mix from time to time in terms of the balance of risk and the flexibility of adjustments in response to the market changes. We are also very cautious about the gearing level of the Group and expect the gearing level will be further improved next year.

On behalf of the Board, I would like to take this opportunity to express my thanks to our shareholders, banks, customers and vendors for their supports and trusts as well as our management and all staffs for their hard workings and commitments during the year.

Chairman

People's Republic of China, 22nd March 2017