China Dongxiang Announces Annual Results FY2020/2021　Revenue Increases by 27.8% to RMB1,970 Million

HONG KONG SAR – Media OutReach – 23 June 2021 -
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 annual results for the twelve months ended 31 March
2021 (the “Reporting Period”). The Group’s revenue reached RMB1,970 million for the Reporting Period, representing
a growth of 27.8% year-on-year
(yoy). Profit attributable to owners of
the Company was RMB1,811 million, representing an increase of 394.8% yoy.
Basic earnings per share increased by 394.1% yoy to RMB30.88 cents. The Board of
Directors has proposed to distribute 35% of the profit attributable to owners of the
Company for the twelve months ended 31 March 2021 as full-year dividend.

Operational Highlights

Intensive
cultivation focusing on China market

During the Reporting Period, domestic consumer sentiments gradually
improved as the pandemic has come under control, accelerating the growth of new
trend in online purchasing. The Group seized the opportunities with the
implementation of delicacy operation in three dimensions of big logistics, retail
localization and product sales, strengthening management of localized sales
teams, driving digitalization of the omni-channel and uplifting the
professional competence of product management teams. It further speeded up
inventory turnover of omni-channel, enhanced channel control and swiftly
responded to market, bringing great improvement in operational efficiency.
During the Reporting Period, the Group reported stable growth in the
performance of outlet stores and shopping malls. As at 31 March 2021, the Group
had a total of 1,170 Kappa stores (excluding Kappa Kid’s stores), representing a
net increase of 41 stores as compared to last year.

Delivering brand
connotation by focusing on minority sports activities

In terms of brand marketing, the Group continued its cross-sector collaboration
with IP and celebrities, incorporating latest trends and cultural ideas into
the brand, delivering the brand spirit of “Never Settling for the Mediocre;
Never Compromise”. This included the Halloween AI Series in collaboration with
young domestic artist Cao Yu (曹羽);
teamed up with Mak Ling Ling, a well-known Feng Shui master in Hong Kong, to
launch the 2021 CNY “Kappa Fortune” series, increasing its brand exposure. The
Group will swift its brand focus back to sports and target the younger
generation as its customer group. Focusing on niche and high-end sports, the
Group partnered with Chinese Equestrian Team, National Fencing Team and
Skateboarding Team to open up opportunities arising in middle- to high-end sports
market segment.

Embracing the new
era with ongoing digitalized omni-channel model

With the pandemic gradually recovering and reviving customer traffic,
the Group’s digitalization and omni-channel reform has become evident. During
the Reporting Period,
the Group’s e-commerce has achieved stable growth, with
digitalization and omni-channel operation
remained as its strategic focus. In addition to maintaining its competitiveness on
mainstream platforms, the brand also actively
explored new emerging platforms, such as
Xiaohongshu, Pinduoduo and Douyin, demonstrating the Group’s versatile marketing strategies of
targeting younger customer groups. On
the other hand, the Group optimized its SCRM membership system, cloud storage and smart
store system to facilitate the integration of omni-channel. E-commerce business recorded a 31.7% growth for the full year.

To better focus on its business in China market, subsequent to the
disposal of the trademark of “Kappa” Japan in July 2020, the Group also decided to license the “Phenix” brand to franchised
operators. This allows the Group to dedicate all of its resources and marketing efforts to
the development of its core brand in China market.

Investment segment
performs well with diversified portfolios to spread risk

During the Reporting Period, the Group reported a net asset value of RMB10,518 million for its investment segment, representing
growth of 10.1% as compared to the same period last year, with investment gains
amounted to RMB2,095 million. In the future, the Group believes that investment
segment will generate stable and sustainable return for shareholders with
prudent investment strategies and outstanding investment partners.

Mr. Chen Yihong, Chairman and Executive Director of China Dongxiang, said, “The pandemic
brought enormous challenges to the industry, but also presented unprecedented
opportunities to sportswear brands in China. The post-pandemic change in
consumption preference has indirectly driven the demand for sportswear
products. The Group successfully navigated the situation with the brand spirit
of innovation and “Not Settling for the Mediocre”, achieving fruitful results.
Looking forward, the Group is fully confident in the prospects of China’s
economy and sportswear industry. With a number of international sporting events
coming up, the Group will seize the market opportunities ahead, striving to
achieve record-high results. The Group will continue to take profitability at
the core, and collaborate with outstanding partners in quality projects with a
global vision, generating stable and sustainable returns for our shareholders.”