Honghua : VOLUNTARY ANNOUNCEMENT ENTERING INTO A SERVICE AGREEMENT OF SHALE GAS FRACTURING

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 SERVICE AGREEMENT OF SHALE GAS FRACTURING

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 a service agreement in respect of shale gas fracturing (the "Service Agreement") has been recently entered into between a subsidiary of the Company (the "Subsidiary of the Company") and a subsidiary of China National Petroleum Corporation (the "CNPC") (the "Subsidiary of CNPC"), pursuant to which, all-electric general fracturing service will be provided to a shale gas development platform in Changning, Sichuan, China by the Subsidiary of the Company in accordance with the terms and provisions of the Service Agreement. The total consideration for the transactions contemplated under the Service Agreement is expected to exceed RMB50 million.

This is the first time of the Company to enter into a service agreement in respect of shale gas fracturing, marking the expansion of the Company's business scope from a single pumping service to a full set of electric fracturing services. The entering into of the Service Agreement reflects customers' recognition of the Company's electric fracturing products and its capabilities in general fracturing service, which helps the Company to further consolidate and expand its market share and influence, and provides a good model for subsequent cooperation.

The 6000HP electric fracturing pump, electric sand-mixingskid, electric fluid supply skid, intelligent command and control center and other complete fracturing equipments for shale gas development which are independently developed by the Company will be used in the all-electric fracturing service, which implements the Company's strategic goal of equipment and service coordinated development. Accordingly, the Company will continue to give play to the competitive advantages of manufacturing enterprises and open up a broader market prospect.

The Service Agreement does not constitute any transaction under Chapter 14 and Chapter 14A of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

On behalf of the Board

Honghua Group Limited

Jin Liliang

Chairman

PRC, 23 December 2019

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.