Honghua : VOLUNTARY ANNOUNCEMENT ENTERING INTO A CONSTRUCTION AGREEMENT

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

HONGHUA GROUP LIMITED

宏華集團有限公司

(a company incorporated in the Cayman Islands with limited liability)

(Stock Code: 196)

VOLUNTARY ANNOUNCEMENT

ENTERING INTO A CONSTRUCTION AGREEMENT

This is a voluntary announcement made by Honghua Group Limited (the "Company").

The board of directors of the Company (the "Board") is pleased to announce that on 25 July 2020, Sichuan Honghua Petroleum Equipment Co., Ltd. (四川宏華石油設備 有 限 公 )("Sichuan Honghua"), a subsidiary of the Company, and The 5th Engineering Co., Ltd., MBEC (中鐵大橋局集團第五工程有限公司) ("MBEC") entered into a construction agreement in relation to jackets for offshore wind power project (the "Construction Agreement"). Pursuant to the terms and provisions of the Construction Agreement, Sichuan Honghua shall provide MBEC with jackets processing and construction services for offshore wind power project. The consideration in relation to the transaction contemplated under the Construction Agreement amounts to an aggregate of approximately RMB0.22 billion.

The Company is actively exploring the new energy market. Since entering the offshore wind power field, the Company has signed orders with a total amount of approximately RMB800 million. We will continue to dedicate additional efforts in the wind power market and expand our business areas. The said cooperation will further consolidate the cooperation between the parties, laying the foundation for subsequent cooperation.

The Construction Agreement was determined after arms' length negotiations between Sichuan Honghua and MBEC. The directors of the Company are of the view that the terms of the Construction Agreement are normal commercial terms, fair and reasonable and are in the interest of the Company and its shareholders as a whole.

Information of Sichuan Honghua and MBEC

Sichuan Honghua, an indirect wholly-owned subsidiary of the Company, is principally engaged in the research, design, manufacturing and services of drilling and exploiting equipment including drilling rigs, fracturing equipment and related parts.

MBEC, a wholly-owned subsidiary of China Railway Major Bridge Engineering Group Co., Ltd. ( 中 鐵 大 橋 局 集 團 有 限 公 司 ), is mainly engaged in bridge engineering construction. It is a national first class construction enterprise, a national first class measurement enterprise and an enterprise with AAA credit rating.

To the best of the knowledge, information and belief of the directors of the Company and after having made all reasonable enquiries, MBEC and its ultimate beneficial owner(s) are independent third parties not connected with the Company and its connected persons (as defined in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules")). The transaction contemplated under the Construction Agreement does not constitute any transaction of the Company under Chapter 14 or Chapter 14A of the Listing Rules.

By order of the Board

Honghua Group Limited

Jin Liliang

Chairman

PRC, 27 July 2020

As at the date of this announcement, the executive directors of the Company are Mr. Jin Liliang (Chairman), Mr. Zhang Mi and Mr. Ren Jie; the non-executive directors of the Company are Mr. Han Guangrong and Mr. Chen Wenle; and the independent non-executive directors of the Company are Mr. Liu Xiaofeng, Mr. Chen Guoming, Ms. Su Mei, Mr. Poon Chiu Kwok, Mr. Chang Qing and Mr. Wei Bin.