Shandong Xinhua Pharmaceutical : FURTHER INCREASE IN SHAREHOLDING BY A CONTROLLING SHAREHOLDER

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.

山東新華製藥股份有限公司

Shandong Xinhua Pharmaceutical Company Limited

(a joint stock company established in the People's Republic of China with limited liability)

(Stock Code: 0719)

INSIDE INFORMATION

FURTHER INCREASE IN SHAREHOLDING BY A CONTROLLING

SHAREHOLDER

This announcement is made by Shandong Xinhua Pharmaceutical Company Limited (the ''Company'') pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and the Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). Reference is made to the announcement of the Company dated 21 May 2019 regarding the increase in shareholding by a controlling shareholder. Unless otherwise stated, capitalised terms used in this announcement shall have the same meanings as defined in the said announcement dated 21 May 2019.

On 20 November 2019, the Company was notified by Hualu Investment that Hualu Investment has acquired certain amount of A Shares via the trading system of Shenzhen Stock Exchange (the "Subsequent Shareholding Increase"). Hualu Investment is the wholly owned subsidiary of the Company's controlling shareholder, Hualu Holdings. The details of the Subsequent Shareholding Increase are as follows:

1. THE SUBSEQUENT SHAREHOLDING INCREASE
   From/on 21 May 2019, Hualu Investment further acquired an aggregate number of

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4,143,168 A Shares through the trading system of Shenzhen Stock Exchange, at the average price of approximately RMB7.12 per share for an aggregate amount of approximately RMB29,480,715.12, representing approximately 0.97% of the total number of A Shares in issue and 0.67% of the total issued shares of the Company. Prior to the Subsequent Shareholding Increase, Hualu Holdings directly held 204,864,092 A Shares, representing approximately 47.99% of the total issued A Shares and approximately 32.94% of the total issued shares of the Company. Hualu Holdings, through its subsidiary Well Bring Limited, indirectly held 17,791,800 H Shares, representing approximately 2.86% of the total issued shares of the Company. As such, in aggregate, Hualu Holdings (including its subsidiaries) held 222,655,892 Shares, representing approximately 35.80% of the total issued shares of the Company before the Subsequent Shareholding Increase. After the Subsequent Shareholding Increase, Hualu Holdings (including its subsidiaries) holds 209,007,260 A Shares, representing approximately 48.96% of total issued A Shares and approximately 33.61% of total issued shares of the Company.

1. Hualu Investment has completed its plan of increasing its shareholding in the Company on the secondary market within the 6-month period commencing from 21 May 2019. During this period, apart from the Shareholding Increase and the Subsequent Shareholding Increase, Hualu Holdings and its concerted actions have not increased their shareholding in the Company through the secondary market.

1. This Subsequent Shareholding Increase complies with the provisions of the Securities Law of the People's Republic of China and other applicable laws, regulations, department regulations and the relevant rules of Shenzhen Stock Exchange and The Stock Exchange of Hong Kong Limited.

IV. Hualu Holdings and its concert parties undertake that they will not reduce their shareholding in the Company during the implementation of the increase in shareholding and within the statutory restricted period.

1. The Company will continue to monitor further increase of shareholding in the Company by the controlling shareholder and will undertake to comply with the information disclosure obligations pursuant to applicable rules in a timely manner.

By Order of the Board

Shandong Xinhua Pharmaceutical Company Limited

Zhang Daiming

Chairman

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20 November 2019, Zibo, PRC

As at the date of this announcement, the Board comprises:

Executive Directors:	Independent Non-executive Directors:
Mr. Zhang Daiming (Chairman)	Mr. Li Wenming
Mr. Du Deping	Mr. Du Guanhua
	Mr. Lo Wah Wai
Non-executive Directors:
Mr. Ren Fulong
Mr. Xu Lie

*for identification purpose only

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