Huayi Tencent Entertainment : Announces 2022 Interim Results Flexibly Deployed the Blue Ocean Market of Internet Healthcare Revenue Nearly Tripled to HK$673 Million

Press Release

For Immediate Release

HUAYI TENCENT ENTERTAINMENT COMPANY LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 419)

Huayi Tencent Entertainment Announces 2022 Interim Results Flexibly Deployed the Blue Ocean Market of Internet Healthcare Revenue Nearly Tripled to HK$673 Million

Results Highlights:

• The Group's revenue for the six months ended 30 June 2022 amounted to approximately HK$673 million, representing a 2.7-time increase compared to approximately HK$183 million for same period in prior year. Gross profit also increased by approximately 2.5 times to approximately HK$141 million. These were mainly attributable to the Group's resolute implementation of its layout in the areas of internet pharmaceutical and healthcare services in the PRC since last year.
• During the Period, in view of the national initiatives which drove the development of internet healthcare industry and the uncertainty brought by the epidemic on the film industry and box office remains, the Group flexibly adjusted its strategies to respond to changes and focused on its internet healthcare services business. It has acquired "Echartnow" and formed "Meerkat Health" and successfully grasped the market opportunities.
• "Echartnow" dedicates itself to the establishment of an integrated healthcare platform which covers different user terminals in the industry. Its business has expanded rapidly. For the six months ended 30 June 2022, "Echartnow" had completed revenues equivalent to HK$229 million, accounted for 34% of the
  Group's revenue for the period.
• Launched in the second half of 2021, the business segments of "Meerkat Health" include healthcare consumption, medical services and healthcare management. Being developed steadily, "Meerkat Health" has achieved revenue of equivalent to HK$346 million, accounted for 51% of the Group's revenue for the period.

(30 August, 2022, Hong Kong)Huayi Tencent Entertainment Company Limited("Huayi Tencent Entertainment", the "Company"; Stock code: 419; together with its subsidiaries collectively known as the "Group") is pleased to announce its interim results for the year ended 30 June 2022 ("1H FY2022" or the "Period").

Two internet healthcare core businesses being the growth drivers

During the Period, the Group recorded a revenue of HK$673 million, representing a 2.7-time increase compared to approximately HK$183 million for same period in prior year. Gross profit also increased by approximately 2.5 times to approximately HK$141 million. These were mainly attributable to the Group's resolute implementation of its layout in the areas of internet pharmaceutical and healthcare services in the PRC since last year. Currently "internet healthcare" is the new form of business raised and prioritized by the State Council. The industry is under rapid growth. Through the acquisition of the "Echartnow" and forming a joint venture "Meerkat Health", the Group has entered and tapped into the market of internet healthcare to grasp the opportunities, and comprehensively penetrate the whole healthcare industry chain. The Group has successfully established its market coverage with regard to smart healthcare in the PRC. "Echartnow" and "Meerkat Health" have even become the core businesses of the Group and the major revenue growth driver with 85% revenue attribution, and are entering a rapid growth period, contributing a significant amount of revenue to the Group in the first half of this year.

"Echartnow", a platform for online prescription, circulation and marketing of pharmaceutical products

The Group has acquired "Echartnow", a platform for online prescription, circulation and marketing of pharmaceutical products since April 2021. The platform connects different user terminals in the industry including pharmaceutical companies, retail pharmacies, doctors and patients. "Echartnow" platform can earn fees with respect to technical services, marketing, development of channels, etc. For the six months ended 30 June 2022, "Echartnow" had completed revenues equivalent to HK$229 million, accounted for 34% of the Group's revenue for the period.

Within only a year, "Echartnow" has adopted the "pharmaceutical companies driving the whole industry chain" strategy and the segment has expanded rapidly. The platform has established 9 operation centres across the country, covering 27 provinces, and its workforce expanded from less than 20 to almost 200. "Echartnow" provides online drug prescription and circulation service and digitized marketing service. The number of pharmaceutical companies that have signed contracts with "Echartnow" platform has reached 67, including large pharmaceutical companies like Qilu Pharmaceutical and Jiangsu Hengrui Pharmaceuticals. The number of pharmacies that have gone online exceeded 2,700, and the number of drugs listed exceeded 162,000.

"Meerkat Health", a smart healthcare services platform

The Group has formed a joint venture "Meerkat Health" together with the industry elites, focusing on smart healthcare services since the second half of 2021. "Meerkat Health"

is devoted to effectively combining the industrial internet and consumer internet in the healthcare management industry. During the Period, it has rapidly established a complete healthcare services system comprising healthcare consumption, medical services and healthcare management. Its business segments cover a complete healthcare services system including healthcare consumption (providing offline self- run and franchised pharmacies with a digital intellectualised and one-stop omnichannel solution), medical services (including online appointment services for vaccination and the digital intellectualised body check services) and healthcare management (providing healthcare management organisations with a smart system, knowledge base, training system and health product library). For the six months ended 30 June 2022, "Meerkat Health" has achieved revenue of equivalent to HK$346 million, accounted for 51% of the Group's revenue for the period.

The business of "Meerkat Health" is also growing steadily. Its healthcare consumption business has entered into partnerships with more than 100 pharmaceutical and healthcare product manufacturers and distributors. In the second quarter, the Gross Merchandise Value ("GMV") of the online appointment services for vaccination increased by 154% compared with the first quarter, while the digital intellectualised body check services covered 19 cities and 21 hospitals, more than 35% of which were Grade A tertiary hospitals. Its businesses are expected to grow rapidly in the second half of 2022.

Entertainment and Media; Healthcare and Wellness Services

As the epidemic persists, it has changed the way audiences watch movies and prevented the film industry and box office from fully recovering to pre-epidemic levels. The outlook remains uncertain. On the other hand, the State Council issued the "14th Five-Year Plan for the Development of the Digital Economy" in 2022. The plan once again emphasised the value of "internet healthcare" to the digital economy. This drove the rapid development of the smart healthcare industry in the PRC. As the uncertainty brought by the epidemic on the film industry remained while the growth potential of internet healthcare industry was huge, the Group kept up with the market dynamics and national initiatives and flexibly adjusted its strategies to respond to changes. Looking ahead, the Group will not make significant investment in new films and television projects for the time being and will focus on its internet healthcare services business.

"Bayhood No. 9 Club", a Healthcare and Wellness Service of the Group, is one of the top green health clubs in the PRC targeting middle- and high-end enterprises and individual clients. During the Period, the business of "Bayhood No. 9 Club" was affected by the epidemic in Beijing and had to suspend its operations for about one month until it resumed operation in mid-May. However, due to the strong market demand, operations have quickly returned to normal upon service resumption. Revenue of "Bayhood No. 9 Club" for the six months ended 30 June 2022 remained

stable at approximately HK$52.63 million, representing a slight drop of 6% comparing to the same period in last year. As the epidemic in Beijing eases and remains under control, additionally it is expected that the demand for outdoor activities will gradually recover and increase, which will continue to bring stable income to the segment.

Elites from internet + healthcare industries help realize the blueprint for the business

As the Group changed its business path, it invited a number of elites from internet industry to join the management team, including Ms. Dong Yu, who worked for Alibaba Group for nearly 15 years especially focusing on the field of medical and healthcare services, Mr. Liu Feng, who served as the chief technology officer of Hangzhou Weimai Technology and worked for Alibaba, Ms. Shang Jing who has about 10 years' experience in sales and marketing in renowned pharmaceutical multinational corporations, and Mr. Wang Jian who has over 25 years' experience in professional medical practice, management of medical and health technology enterprises, as well as investments and entrepreneurship in the field of medical and health technology. With their rich experience, these industry elites served to support the strategic transformation of the Group and realized a long-term and stable blueprint for the internet healthcare business.

Mr. Yuen Hoi Po, Executive Director and Chief Executive Officer of Huayi Tencent Entertainment, said, "The persistence of the epidemic brought challenges to the business environment. However, the Group took the challenge as an opportunity, and saw the huge demand and growth potential of the internet healthcare market. The Group actively dovetailed with the national initiatives and flexibly transformed the core business into the internet healthcare industry. With the acquisition of "Echartnow" and the forming of the joint venture company "Meerkat Health", the Group successfully deployed the blue ocean market of smart healthcare and captured market opportunities and benefits, leading to nearly triple its revenue. Looking ahead, the group will continue to cultivate the two core businesses and reward our shareholders for their support with achievements."

-End-

About Huayi Tencent Entertainment Company Limited

Huayi Tencent Entertainment Company Limited (Stock Code: 00419.HK) conducts businesses in two segments namely Healthcare and Entertainment and Media. The Group's Healthcare business focuses on 1) healthcare service platforms, "Echartnow" and "Meerkat Health", providing a series of online healthcare services and striving to build an internet healthcare platform ecosystem; 2) the operation of "BayhoodNo. 9 Club", one of the top green health clubs in the PRC with well-equipped facilities such as a standard golf course, spa facilities as well as food-and-beverages-related business to offer professional and excellent healthcare and wellness services. In

respect to the Entertainment and Media business, the Group produces quality international films, animations, and TV dramas, and invests in international entertainment companies through M&As and resource integration, aimed at building an integrated platform with both content development and online-to-offline entertainment channels.

For more information about Huayi Tencent Entertainment, please visit the official

website of the Group:http://www.huayitencent.com.

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