Precious Dragon Technology : DISCLOSEABLE TRANSACTION IN RELATION TO CONSTRUCTION AGREEMENTS FOR THE NEW PRODUCTION PLANT IN THAILAND

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.

PRECIOUS DRAGON TECHNOLOGY HOLDINGS LIMITED

保 寶 龍 科 技 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1861)

DISCLOSEABLE TRANSACTION

IN RELATION TO

CONSTRUCTION AGREEMENTS

FOR THE NEW PRODUCTION PLANT IN THAILAND

Financial Adviser to the Company

THE CONSTRUCTION AGREEMENTS

The Board is pleased to announce that on 12 April 2021 (after trading hours), Precious Dragon Thai, a wholly-owned subsidiary of the Company, entered into a construction agreement with each of State Construction and S.P. 64 in relation to the design and construction of the Factory on the Land at a total contract sum (including value-added tax and other applicable tax) of Baht 124,956,873.30 (equivalent to approximately HK$30.8 million) and Baht 90,933,982.46 (equivalent to approximately HK$22.4 million), respectively. Pursuant to the Construction Agreements, the Contractors will, among other things, perform structural and architectural works for the Factory including production lines, warehouse and office.

LISTING RULES IMPLICATION

As the highest applicable percentage ratio under the Listing Rules in respect of the Construction Agreements in aggregate exceeds 5% but is less than 25%, the transactions contemplated under the Construction Agreements constitute a discloseable transaction for the Company and is subject to the announcement and reporting requirements under Chapter 14 of the Listing Rules.

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Reference is made to (i) the announcement of the Company dated 10 June 2020 in relation to acquisition of a land in Thailand for the construction of the Factory in Thailand, which was completed on 22 July 2020; and (ii) the announcement of the Company dated 11 November 2020 in relation to the entering into of letters of intent for the construction of the Factory (the "Announcements").

INTRODUCTION

On 12 April 2021 (after trading hours), Precious Dragon Thai, a wholly-owned subsidiary of the Company, entered into a construction agreement with each of State Construction and S.P. 64 in relation to the design and construction of the Factory on the Land at a total contract sum (including value-added tax and other applicable tax) of Baht 124,956,873.30 (equivalent to approximately HK$30.8 million) and Baht 90,933,982.46 (equivalent to approximately HK$22.4 million), respectively. Pursuant to the Construction Agreements, the Contractors will, among other things, perform structural and architectural works for the Factory including production lines, warehouse and office.

PRINCIPAL TERMS OF THE CONSTRUCTION AGREEMENTS

Date	:	12 April 2021
Parties	:	(i)	Precious Dragon Thai; and
		(ii)	each of State Construction and S.P. 64
		To the best of the Directors' knowledge, information and
		belief, after having made all reasonable enquiries, the
		controlling shareholders of S.P. 64 and State Construction
		are Mr. Chaitanawat Charoenkitworawut and Mr. Supakit
		Patcharaporn, respectively, which are third parties
		independent of the Company and its connected persons (as
		defined under the Listing Rules).
Subject matter	:	Pursuant to the Construction Agreements, each of State
		Construction and S.P. 64 shall be responsible for the

design and construction work in relation to the Factory, including but not limited to the design and construction of

(i) warehouse building; (ii) office building; (iii) utility building; (iv) external works; (v) mechanical, electrical and plumbing (MEP) system works; and (vi) other related works (collectively, the "Contract Works").

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Consideration	: The contract sums (including value-added tax and other
	applicable tax) of the Construction Agreements with State
	Construction and S.P. 64 are Baht 124,956,873.30
	(equivalent to approximately HK$30.8 million) and Baht
	90,933,982.46 (equivalent to approximately HK$22.4
	million), respectively.
	The contract sums under the Construction Agreements
	were determined based on arm's length negotiation
	between the parties with reference to the proposed design
	and construction work for the Factory and the relevant
	experience of the Contractors.
	The Group is expected to finance the above contract sums
	by a combination of internal resources and external
	borrowings.
Advance payment	: An advance payment equivalent to Baht 12,495,687.33
(the "Advance	(equivalent to approximately HK$3.1 million), being 10%
Payment")	of the contact value, has been made to State Construction
	in exchange for a bank guarantee.
	An advance payment equivalent to Baht 4,546,699.12
	(equivalent to approximately HK$1.1 million), being 5%
	of the contact value, has been made to S.P. 64 in exchange
	for a bank guarantee.
Payment term	: Precious Dragon Thai shall pay to the Contractors on a
	monthly basis based on the actual value of work
	completed.
	The Contractors shall submit an application for payment
	to the project manager (the "PM") appointed by Precious
	Dragon Thai in each month. Payment certifications shall
	be issued by the PM no more 7 days from the receipt of all
	information necessary to assess the actual value of work
	completed. Payment will be made by Precious Dragon
	Thai to the Contractors within 30 days following the
	aforesaid certification of the Contractors' application for
	payment.

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	The payment amount of each monthly bill shall be
	deducted by (i) 10% of the gross bill for State
	Construction or 5% of the gross bill for S.P. 64 until the
	amount of the Advance Payment is recovered; and (ii)
	retention money (the "Retention Money") equivalent to
	5% of the gross bill.
	The Retention Money shall be released to the Contractors
	after completion of the Contract Works and issuance of
	the certificate of final completion of the Contract Works
	by the PM to the Contractors.
Completion	: The Contractors shall complete the Contract Works on or
	before 15 June 2021.
	Upon completion of the Contact Works, the Contractors
	shall confirm that the Contract Works are in accordance
	with the Construction Agreements and inform the PM in
	writing to inspect the Contract Works in the presence of
	the Contractors. If the Contract Works pass the inspection,
	the PM shall issue the certificate of final completion to
	the Contractors.
Maintenance period	: The Contactors shall make good any defect of the
	Contract Works during the period of 365 days from the
	date the Contract Works are received.

REASONS FOR AND BENEFITS OF ENTERING INTO THE CONSTRUCTION

AGREEMENTS

The Group is principally engaged in the content filling of aerosol cans, as well as the production and sales of aerosol and non-aerosol products. The Group's products include automotive beauty and maintenance products, personal care products and other products. The Group mainly operates its businesses in Mainland China, Japan, Middle East, the United States and Asia.

As disclosed in the Announcements, the construction of the Factory is in line with the Group's plan to build and develop an overseas manufacturing plant and will, upon completion and operation of the Factory, enable the Group to (i) cope with the changes and impacts that may result from the Sino-US trade war and other international trade barriers; (ii) benefit from the lower cost of raw materials from the

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surrounding area, enhancing the competitiveness of the Group's products in Asia; and (iii) diversify the operational risk arising from the increasingly stringent health, safety and environmental policies, laws and regulations in the PRC. As such, the Group entered into the Construction Agreements with the Contractors on 12 April 2021 for the design and construction of the Factory.

Based on the above, the Directors consider that the Construction Agreements were entered into after arm's length negotiation and on normal commercial terms which are fair and reasonable and are in the interest of the Company and the Shareholders as a whole.

INFORMATION ON THE GROUP AND THE CONTRACTORS

The Group is principally engaged in the content filling of aerosol cans, as well as the production and sales of aerosol and non-aerosol products. The Group's products include automotive beauty and maintenance products, personal care products and other products. The Group mainly operates its businesses in Mainland China, Japan, Middle East, the United States and Asia.

State Construction and S.P.64 are validly existing under the laws of Thailand and are principally engaged in engineering and construction.

LISTING RULES IMPLICATION

As the highest applicable percentage ratio under the Listing Rules in respect of the Construction Agreements in aggregate exceeds 5% but is less than 25%, the transactions contemplated under the Construction Agreements constitute a discloseable transaction for the Company and is subject to the announcement and reporting requirements under Chapter 14 of the Listing Rules.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following words and expressions shall have the meaning ascribed to them below:

"Baht"	Baht, the lawful currency of Thailand
"Board"	the board of Directors
"Company"	Precious Dragon Technology Holdings Limited, an
	exempted company incorporated in the Cayman
	Islands with limited liability on 4 May 2018, the
	shares of which are listed on the main board of the
	Stock Exchange (stock code: 1861)

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"Construction Agreements"	the construction agreements dated 12 April 2021
	entered into between Precious Dragon Thai and
	Contractors in relation to the design and
	construction of the Factory
"Contractors"	State Construction and S.P. 64
"Director(s)"	the director(s) of the Company
"Factory"	the production plant to be constructed on the Land
	pursuant to the Construction Agreements
"Group"	the Company and its subsidiaries
"Hong Kong"	the Hong Kong Special Administrative Region of
	the PRC
"HK$"	Hong Kong dollars, the lawful currency of Hong
	Kong
"Land"	the land situated in Pinthong Industrial Estate
	Project 3 at the following address: 219 Moo 6,
	Bowin Sub-district, Sriracha District, Chonburi
	Province 20230, Plot No. G016, with the Title Deed
	No. 170459, Land Range No. 5235 III 2248,2448,
	Land No. 5101, Survey Page no. 22333, covering a
	total area of 36,983.20 square meters
"Listing Rules"	the Rules Governing the Listing of Securities on
	the Stock Exchange
"PRC"	the People's Republic of China which, for the
	purposes of this announcement, excludes Hong
	Kong, the Macau Special Administrative Region
	and Taiwan
"Precious Dragon Thai"	Precious Dragon Technology Thai Limited, a
	limited company incorporated in Thailand and a
	wholly-own subsidiary of the Company
"Shareholders"	holders of ordinary shares of the Company
"S.P. 64"	S.P. 64 KARNCHANG Co., Ltd., a company
	validly existing under the laws of Thailand
"State Construction"	State Construction Co., Ltd., a company validly
	existing under the laws of Thailand

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"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Thailand"	the Kingdom of Thailand
"%"	per cent.

By order of the board of

Precious Dragon Technology Holdings Limited

Ko Sau Mee

Chairlady and Executive Director

Hong Kong, 12 April 2021

As at the date of this announcement, the executive Directors are Ms. Ko Sau Mee, Ms. Lin Hing Lei, Mr. Lin Hing Lung and Mr. Yang Xiaoye; and the independent non-executive Directors are Mr. Lee Yiu Pui, Mr. Poon Tak Ching and Mr. Pang Cheung Wai Thomas.

Amounts denominated in Baht in this announcement have been converted into HK$ at the rate of HK$ 1 = Baht 4.0560 as extracted from Bloomberg as at 12 April 2021. This rate is for the purposeof illustaryion only amd does not constitute a representation that any amount has been, could have been converted at the above rate or any other rates.

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