China Display Optoelectrncs Tech Hld : ANNOUNCEMENT ON BUSINESS UPDATE FOR THE THIRD QUARTER ENDED 30 SEPTEMBER 2019

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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 THIRD QUARTER ENDED 30 SEPTEMBER 2019

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 ("Listing Rules").

In order to further enhance the transparency of the Group and provide additional information with which shareholders and potential investors of the Company 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 nine months ended 30 September 2019 (the "Review Period").

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BUSINESS REVIEW

For the Review Period, driven by the orders placed by first-tier brand customers, the Group's sales volume increased by 144.1% year-on-year to 79.5 million units. As a result, the Group's revenue increased to RMB4,545 million, representing a year-on-year increase of 78.0%. In terms of the non-processing products, the revenue of laminated LCD module products recorded a rise of 79.2% year on-year to RMB3,642 million; the revenue of non-laminated LCD module products was RMB653 million, representing an increase of 25.3% year-on- year. The overall average selling price (excluding processing modules) for the nine months decreased by 3.4% year on-year to RMB75.7, because the raw materials of certain products had been provided by customers directly during the first half of 2019, thus the cost of such raw materials was not reflected in the selling price for the relevant products. However, the overall average selling price (excluding processing LCD modules) for the third quarter increased by 2.3% year on-year to RMB87.9, due to the improvement in product mix. During the Review Period, the Group's revenue from processing products amounted to RMB251 million.

The Group's revenue by product segment and respective year-on-year changes during the Review Period were as follows:

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The Group's sales volume by product segment and respective year-on-year changes during the Review Period were as follows:

OUTLOOK

Looking ahead, it is expected that the uncertainties of the global economy will continue to mount up due to the Sino-US trade frictions and intensifying geopolitical tensions. Although the development focus of the global semiconductor display industry has gradually shifted to China, oversupply persisted during the Review Period. Meanwhile, the volatility of the US market has also led to the reorganization of the global smartphone market and the related supply chains.

The Group has been recognized by various global first-tier brands after the vertical integration with Shenzhen China Star Optoelectronics Technology Co., Ltd*（深圳市華星光電技術有 限公司）together with its subsidiaries. However, the imbalance between supply and demand in the semiconductor industry will result in intensified market competition, before the commercialization of 5G technology and the foldable AMOLED end products gaining wide acceptance.

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By capitalizing on the existing partnerships, the Group will continue to strengthen its customer base, actively reduce costs and increase efficiency to maximize production efficacy and effectiveness. At the same time, the Group will elevate its research and development capabilities to enhance and prepare for developing advanced display technology, including in-display fingerprint and AMOLED technologies, so as to lay a solid foundation for future operation. Meanwhile, the Group is also increasing its presence in the smart home and automotive display markets to capture the immense opportunities therein, as well as expanding its business horizontally.

In the long run, the Group still remains cautiously optimistic about the development prospects of the display module business and believes that its competitiveness will be further reinforced by improving the industrial value chain and enhancing its technology and scale advantages. The Group will maintain a balance between sales and healthy progress in the midst of challenges, and be committed to creating 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 30 September 2019 amounted to approximately RMB192 million, of which 62.0% was in Renminbi, 31.6% was in US dollar and 6.4% was in HK dollar. As at 30 September 2019, the Group's interest-bearing bank loans was nil.

The Board wishes to remind shareholders and potential investors of the Company 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 to provide any indication or assurance on the financial results of the Group for the nine months ended 30 September 2019. Shareholders and potential investors of the Company are cautioned not to place undue reliance on such data.

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

On behalf of the Board

LIAO Qian

Chairman

Hong Kong, 24 October 2019

The English translation of Chinese names or words in this announcement, where indicated by " *", are included for information purpose only, and should not be regarded as the official English translation of such Chinese names or words.

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. Zhao Jun 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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