Shenguan Holdings (Group) Ltd. provided consolidated earnings guidance for the six months ended 30 June 2016. For the period, the group is expected to record a decrease of approximately 40-45% in its net profit as compared to that for the same period in 2015. Such decrease is primarily due to the following reasons: during the reporting period, although sales volume of collagen casings increased as compared to the Previous Period, average selling price decreased due to the overall decline in prices of the products in this industry and the Group's endeavour to lower the inventory level. The decrease in average selling price caused a drop in the gross profit margin as compared to the previous period. During the second half of 2015, the group had acquired a technology knowhow through the acquisition of a subsidiary. During the reporting period, the amortization of the technology knowhow had caused a decrease of net profit of approximately RMB 10,000,000. The amortization had no effect on the cash flow of the group. During the reporting period, the group had incurred expenses to develop its new products and new businesses, which were started in the second half of 2015. If the effect of the amortization of the technology knowhow is excluded, the group is expected to record a decrease of approximately 30-35% in its net profit for the reporting period as compared to that for the previous period.