Focusing on Point-of-sale Reform ; Omni-channel Distribution of Products Starts

�

Results
Highlights

HONG
KONG, CHINA�-
Media OutReach�- 19 June 2019�-�The
leading international sportswear brand enterprise in the PRC, China Dongxiang (Group) Co., Ltd.
("China Dongxiang" or "the Company", together with its
subsidiaries, "the Group", HKEx stock code: 3818) announces its
results for the fifteen months ended 31 March 2019 ("Reporting Period"). The
Group's revenue for the Reporting Period was RMB2,144 million, while profit
attributable to equity holders of the Company was RMB866 million. Basic and
diluted earnings per share was RMB14.91 cents. As a reward to shareholders for
their unfailing support, the Board of Directors has proposed to distribute 30%
and 20% of the net profit attributable to equity holders for the fifteen months
ended 31 March 2019 as final dividend and special final dividend, respectively,
representing a dividend payout ratio of 50%.

Operational Highlights of 2018/2019

• China Segment: Launching A New Model
  and Securing Product Supply

������

The Group has reinforced
cross-sector collaboration with celebrities and key opinion leaders in various
sectors in the Reporting Period to fully envision the fashion trends and
strengthen its brand penetration. The Group has also endeavoured to develop a digitalised
member recruitment programme for Kappa to increase members' repeated
purchase by omni-channel management
of members and big data utilisation for precise marketing. Meanwhile, the Group
has stayed focused on point-of-sale reform by optimising existing structure of
its stores, actively managing the proportion of top stores, shopping mall
stores and outlet stores. In addition, the first step of reform on
relationship-building channels for customer adjustment has been completed, the
direct-sale system and direct-franchised customers accounted for over 90% of
the Group's entire business. The construction of two nationwide logistics and
distribution centres will be completed in the next quarter, aiming to provide
secured and prompt product turnover. The Group has sought closer cooperation
with
reputable e-commerce platforms, including Tmall, JD.com and vipshop.com,
its e-commerce business for the Reporting Period recorded a significant growth.

During the Reporting Period, the
Group achieved outstanding results on the marketing programme of kid's wear
business. The Group has launched a sequence of effective marketing events for
kid's wear in order to further uplift its brand awareness in kid's wear market,
for example, Kappa has announced via social media platforms that it will
continue to be the sole official sponsor of the "Chinese Football Boy" (??????
) campaign 2019 for the provision of sports gear. The Weibo hashtag of
#Chinese Football Boy# secured more than 3 billion click views. During the Reporting
Period, revenue from the kid's wear business reached RMB151 million, accounting
for 8.6% of the revenue from China segment.

As at 31 March 2019, the Group had a total of
1,502 Kappa stores (including 295 Kappa Kid's stores), representing a net
increase of 15 stores as compared to the end of 2017 (a net increase of 70
Kappa stores and a net decrease of 55 Kappa Kid's stores).

• 
  Japan Segment: Improvement in Financial Performance and
  Steady Progress Made on Reform
  

The Japan business continued to undergo
reforms. During the Reporting Period, revenue from Japan segment grew
significantly with an improved financial condition. The Group has organised a
number of marketing activities tailored to the characteristics of local
consumer spending in Japan, facilitating steady development of its business in
Japan. Meanwhile, the Group has placed great emphasis on the business
development of PHENIX brand in China as well as overseas sales of PHENIX brand
in Europe and other markets. PHENIX China will prepare well in advance for the
coming of Beijing 2022 Winter Olympics by focusing on omni-channel expansion,
club member services and brand marketing.

• Investment
  Segment:
  Progress Made in a Cautious and
  Pragmatic Manner

In 2019, the Group's investment business
achieved a healthy growth amid fluctuations in global capital markets. As at 31
March 2019, the Group reported net asset value of investments of RMB8,668
million, a 50% surplus over
the market capitalisation of the Group for the corresponding period. During the
Reporting Period, the Group had investment net gains of RMB1,054 million. The
price of shares in secondary market held by the Group, such as Alibaba, was
volatile due to market fluctuations, but the share price during the Reporting Period
was generally stable. Certain investment funds indirectly invested by the Group
also achieved a significant growth in value.

Mr. Chen
Yihong
, Chairman and Executive Director of China Dongxiang, said, "Though the
domestic and international economic environment has become complicated and
complex, China Dongxiang
continued our reforms by adopting a series of effective measures which has made
good progress with interim achievements in line with our expectation. As a
company that has been established for over 17 years, China Dongxiang will
continue to move forward and tackle challenges with confidence, bringing stable
and considerable returns to shareholders."

About China Dongxiang (Group) Co., Ltd. (Stock code: 3818)

China
Dongxiang (Group) Co., Ltd. is a leading international sportswear brand
enterprise in China which has been listed on the Main Board of the Hong Kong
Stock Exchange since 10 October 2007. The Group is primarily engaged in the design,
development, marketing and wholesale of branded sportswear in China. Currently,
China Dongxiang owns all rights to the internationally renowned Kappa brand in
China, Macau and Japan. On 1 May 2008, China Dongxiang completed the
acquisition of PHENIX, a Japanese sportswear enterprise. PHENIX is the most
popular ski brand in Japan with the largest market share, as well as a
well-known brand in the international market.