Huazhang Technology Will Acquire a Logistics And Warehouse Centre in Guangdong Province at a Consideration of Approximately HK$205 Million

HONG KONG, CHINA - Media OutReach - 18 June 2017 - Huazhang Technology Holding Limited ("Huazhang" or the "Group", HKSE: 1673) is pleased to announce that, the Company will acquire the entire issued share capital of the Target Company and the shareholder's loan, at an aggregate consideration of approximately HK$205 million, which would be satisfied in full by the Company's issue of the Consideration Shares upon Completion.

The total number of Consideration Shares to be allotted and issued upon Completion based on the issue price of HK$2.55 per Consideration Share is approximately 80.40 million. The issue price represents a discount of approximately 30.9% to the closing price of HK$3.69 per Share as quoted on the Stock Exchange on the Last Trading Day (16 June). Immediately after Completion and allotment and issue of the Consideration Shares, Swift Fortune Holdings Limited and 777 Logistics Warehouse Holdings Limited will own 8.86% and 2.95% of Huazhang.

The Target Group includes Fu An 777 Logistics Limited, HK Subsidiary and Guangdong Fu An 777 Logistics Warehouse Limited (廣東富安三七物流倉儲有限公司, WFOE).

The Target Group is currently constructing a logistics and warehouse centre on the Project Land located in the Guangdong Province. Upon completion which is expected to be around the end of 2017, the centre can provide bonded logistics services of raw materials, equipment and supplies for papermaking enterprises in the PRC. The Project Land has a total site area of approximately 193,203 square meters. The Project Land was granted by the PRC government with a lease period from 23 December 2015 to 22 December 2065 specified in the land use right certificate.

The Board considers that (a) Guangdong Province is one of the most important bases of the paper industries in the PRC with more than 100 papermaking enterprises, (b) due to the improving national living standard and the shift of market consumption and logistic pattern driven by online shopping, the demand for the production equipment for packaging paper and household paper was strong, (c) in response to the latest policies implemented by the PRC government, the paper industry in the PRC has to leverage on intelligence, automation, human resources and technological innovation to speed up the reform of the enterprises for long-term development and will hence bring numerous business opportunities to the Group and (d) the Acquisition could help strengthen the Group's after-sales and maintenance services, establish a one-stop integrated service platform through further integration of internal resources and promote all-rounded services to papermaking enterprises. The Board considers that, through acquiring the Target Group, the Company will be able to expand its customer base and market share in the market segment of papermaking industry and to meet potential future increasing demands of our products and services through the logistics and warehouse centre.

About Huzhang Technology Holding Limited

The Group is principally engaged in research and development, manufacture and sale of industry automation systems, sludge treatment products and corresponding services. The Group's industrial automation systems and sludge treatment products are custom-built in accordance with the specifications and requirements provided by the Group's customers. The Group is also engaged in the provision of after-sales and other services Group's existing customers.