D&G Technology Signed a Strategic Partnership Framework Agreement with China Resources Cement
to explore Southern and South-western China with establishment of
Commercialised Asphalt Mixture Production Sites

([-]November 2021 – Hong Kong) D&G Technology Holding Company Limited (Stock Code: 1301.HK, together with its subsidiaries, collectively “the Group”), which was awarded the “China’s Top 30 Construction Machinery Manufacturer” for 8 consecutive years, is pleased to announce that the Group has signed a strategic partnership framework agreement with China Resources Cement Holdings Limited (Stock Code: 1313.HK, “China Resources Cement” or “CRC”), to explore collaborations in certain fields including the design and manufacturing of equipment, commercialisation of asphalt mixture, equipment intelligence, and scientific research and development and technical talent cultivation in Hong Kong. On 22 October, both parties participated in the strategic partnership framework agreement signing ceremony and held the first working meeting in Shenzhen. The strategic partnership with CRC is the Group’s second collaboration with a large-scale enterprise following the strategic partnership with another SOE LiuGong Wuxi Road Equipment Company Limited in June 2021. The Group has once again demonstrated its well-recognised experience and technical edges in the operation of high-end equipment, undoubtedly leading to a win-win situation in the businesses that the Group and CRC have synergies.

According to the strategic partnership framework agreement, both parties will work together to establish stationary green asphalt mixture production bases in southern and south-western China by leveraging the Group’s expertise and technical know-how capabilities in the manufacturing and operation of high-end recycling asphalt mixing plants and the support of CRC’s excellent distribution channels and leading industry position in the region. In addition, both parties will explore further collaborations in regard to cement equipment digitalization, large equipment design and manufacturing technologies, as well as scientific research and development and technical talent cultivation in Hong Kong.

Ms. Choi Kwan Li, Glendy, the Executive Director & Chief Executive Officer of D&G Technology, commented, “The collaboration with the leading construction materials enterprise China Resources Cement has once again showcased our well-recognised capabilities in the high-end environment-friendly asphalt mixing plant field. Through this strategic partnership, both parties will jointly establish the stationary green asphalt mixture production bases in southern China, where CRC has a leading market position in the supply of cement and concrete. This amplifies the Group’s business at the same time, achieves greater economic benefit and secures a mid to long-term development, and eventually generates more returns to the shareholders.”

In June 2021, D&G Technology announced its strategic partnership with LiuGong Wuxi Road Equipment Co., Ltd. The Group would design and manufacture a new series of asphalt mixing plants for the local and overseas sale of LiuGong Road Equipment. Guangxi LiuGong Group Co., Ltd. is a state-owned enterprise that primarily engages in construction machinery (including road machinery), agricultural machinery, and modern services.

The Group is committed to the development of asphalt related business along the supply chain with an aim to broaden income sources and raise profits. In order to leverage the synergies of local expertise, the Group has been seeking potential strategic partners to develop the production and sale of asphalt mixtures business.

In July 2018, the Group’s subsidiary Langfang De Feng New Materials Technology Limited (“Langfang De Feng”) and Sichuan Xin De Yuan Trading Limited (“Sichuan Xin De Yuan “) jointly established Sichuan Rui Tong De Long New Materials Technology Limited (“Sichuan RTDL”). The Group expected that with the leverage of local expertise of Sichuan Xin De Yuan, the establishment of Sichuan RTDL would push forward the application of asphalt mixing plant station with local government in Sichuan. However, the progress of development of asphalt mixing plant station remained slow since the joint venture was formed. On 30 May 2021, Langfang De Feng entered into a share transfer agreement with Sichuan Xin De Yuan to transfer 50% of equity interest in Sichuan RTDL to its joint venture partner for a consideration of approximately RMB2.4 million. Upon the completion of the share transfer, Sichuan RTDL will no longer be a joint venture of the Group. The Group’s management considered that the share transfer offers an opportunity for the Group to realise its investment at a profit and can provide funds to cater for other new suitable investment opportunities with more growth potential in the development of production and sales of asphalt mixture plant business.

In May 2021, the Group has entered into an agreement with LiuGong Road Equipment to become the exclusive supplier of asphalt mixing plant for LiuGong Road Equipment. The Group will research and develop, design and manufacture products under the label of “LiuGong”. The Group expects this strategic partnership will further penetrate the mid-end asphalt mixing plant market to win more orders and expand its revenue stream. Furthermore, the collaboration enables LiuGong Road Equipment to enrich and improve its one-stop road construction equipment solution to achieve a win-win situation.

The Group expects that the local demand for asphalt mixing plants in the second half of 2021 shall gradually increase as the PRC government would inject more funds into domestic infrastructure projects to stimulate the local economy. Management also expects the customers shall accelerate the settlements going forward as more road construction projects and funding shall be in place in China. With its established overseas network and high-technology asphalt mixing plants, the Group is prepared to grasp the opportunities of upgrading asphalt mixing plant technology and equipment in countries in South Asia and in the ASEAN region. To utilise the Group’s wide clientele base of over 600 asphalt plants spreading across the PRC and 35 nations overseas, the Group is also exploring business opportunities in developing business upstream into the road construction and maintenance materials equipment and downstream into the asphalt mixture provision. The Group will however manage its business development strategies cautiously due to the relatively volatile international economic and political conditions.

Ms. Choi Kwan Li, Glendy, the Executive Director & Chief Executive Officer of D&G Technology said: “In view of the ongoing US-China trade war and COVID-19, we believe the PRC government will continue adopting policies to stimulate the local economy and increase the fixed asset investment. Besides, in light of growing awareness on environmental protection issues during the asphalt mixture production among the road construction and maintenance companies and the PRC government’s emphasis on reducing pollution from industrial sector, the demand for our recycling and environmentally-friendly products continue to grow in the long run. There will be increasing demand for the recycling asphalt plants as well as the modification services of adding recycling and environmental protection functions to existing plants. The Group will further promote green technology innovation and continue to improve its competitive advantage so as to reinforce its leading position in the market. Looking ahead, the Group is prepared to grasp the business opportunities arising from the “Belt and Road” construction projects and bring substantial returns to our shareholders.”

Become the Exclusive Supplier of Asphalt Mixture Mixing Equipment
Tap into Domestic and Overseas Markets Together

26 May 2021 - D&G Technology Holding Company Limited (Stock Code: 1301.HK, together with its subsidiaries, collectively the “Group”), which was awarded the “China’s Top 30 Construction Machinery Manufacturer” for 8 consecutive years, is pleased to announce that the Group has reached a strategic partnership with LiuGong Wuxi Road Equipment Co., Ltd. (“LiuGong Road Equipment”), to achieve complementary advantages and a win-win result. The Group will design and manufacture a new series of asphalt mixing plants for LiuGong Road Equipment, which will be distributed and sold in domestic and overseas markets.

According to the agreement, the Group will become the exclusive supplier of asphalt mixing equipment for LiuGong Road Equipment. The Group will research & develop, design and manufacture products under the label of “LiuGong”, by leveraging its technical strength, as well as LiuGong’s well-established distribution network and strong financial services capabilities, to sell the products to domestic and overseas markets. The Group expects this strategic partnership will further penetrate the mid-end asphalt mixing plant market to win more orders and expand its revenue stream. Furthermore, the collaboration enables LiuGong Road Equipment to enrich and improve its one-stop road construction equipment solution to achieve a win-win situation.

Ms. Choi Kwan Li, Glendy, Executive Director & Chief Executive Officer said, “As a leading manufacturer and service provider of medium to large-scale high-end asphalt mixing plants in China, D&G has strived to develop its business in all directions and further penetrate the road construction market in China, as well as the countries along the "Belt and Road Initiative". By partnering with LiuGong Road Equipment, the world's leading construction machinery manufacturer, it is expected to generate magnificent synergies and promote our business development in mid-end asphalt mixing plant market. Looking forward, we will pay close attention to co-seize the potential opportunities in global market, as well as the business opportunities brought by the "Belt and Road Initiative", in order to generate synergies between businesses and bring greater returns to our shareholders.”

D&G Technology (1301.HK), which was awarded the “World’s Top 100 (Plus 50) Construction Machinery Manufacturer” and “China’s Top 30 Construction Machinery Manufacturer”, is committed to the pursuit for technological innovation.

Recently, the Company has applied the concept of “5G+ Industrial Internet of Things (IIoT)” to the field of asphalt mixing plant, and officially launched an industry first “5G+ IIoT” asphalt mixing plant in Hubei Province. The plant will accelerate the development of the industry by enhancing operational efficiency and promoting industrial interconnection.

With the world entering the 5G era, China is devoting greater dedication to achieve urbanization and technological development. D&G Technology stays abreast of the moving pulse of the market by launching China’s first asphalt mixing plant integrated with 5G technology in February 2021. This application of 5G technology to the road construction machinery field is never seen before in the industry and aiming to foster the development of the third generation of smart construction machines, which can facilitate clients’ needs in overcoming the challenges associated with digitalization under business transformation.

In terms of the industrial field, D&G Technology continues to cooperate with different industries and organizations to develop and explore the possible application for 5G technology. Meanwhile, 5G brought revolutionary reindustrialization to the manufacturing industry, and gave rise to the segment where smart manufacturing and innovative technology shapes its foundation. With the application of big data, Internet of Things (IoT) and automation, 5G technology supported the creation of high-tech smart factory with enhanced production efficiency and quality while keeping operational cost under control.

The newly launched “5G+ IIoT” asphalt mixing plant draws on the technical advantages of 5G technology, IoT and Edge computing, to enable real-time control, automated upgrade for production facility and labeling, which optimizes operational efficiency and minimizes business expenses. The “5G+ IIoT” asphalt mixing plant showed success in monitoring and controlling a project site instantaneously from thousands of kilometers away at the stage of debugging and installation, demonstrating its remarkable network connectivity and high-level automation, real-time machinery status overview and diagnostics, along with the feature for remote production control when deemed necessary. This innovative advancement for the operation of asphalt mixing plant lays a solid foundation for future development of fully automated production facility.

According to a report by KPMG, a renowned accounting firm, the need for companies to digitally transform their current business models is all the more pressing as the effect of the pandemic unfolds, where 5G technology and edge computing are likely to play an important role in the recovery of global economy. Boosted by the rapid development in 5G and edge computing, the manufacturing industry is expected to grow by 51% in 2019-2023, representing an increase of market opportunities valued at US$ 206 billion within the manufacturing ecosystem.

The 5G commercialization in China is accelerating at a progressively faster pace, as state policies favors the execution of development strategy for IIoT innovation and propels the joint development of industrialization and Informatization. Ministry of Industry and Information Technology (MIIT) had released the “Action Plan for Development of Industrial Internet Network Infrastructure (2021-2023)”. Liu Liehong, Vice Minister of MIIT, stated earlier that over 718,000 5G base stations have been built in China, accounting for about 70% of the world's total. In addition, 5G networks in standalone mode have covered all cities in the country, with over 200 million terminal connections established, and the average household usage of 5G mobile traffic has surpassed 4G usage by 50%. The Chinese telecommunication industry has invested over 260 billion in the 5G telecom network infrastructure and has since rolled out the 5G terminal pilot program in over 30 provinces across the country, with its implementation covering over 10 sectors, including energy, medical care, transportation, education, and cultural tourism. Meanwhile, the 5G telecommunication network in Hong Kong will be established by April 2020, and the local government is actively accelerating 5G commercialization in support of state policies.

D&G Technology has been responding to the PRC government’s call to develop the IIoT platform with considerable human and material resources. In 2019, The “DGLEAP" Control System developed by D&G Technology became a key project for developing IIoT in Hebei Province. In 2020, D&G Technology applied 5G technology and developed the "5G+ IIoT" asphalt mixing plant. The first smart asphalt mixing plant developed by D&G Technology made use of 5G technology to enable real-time remote production control and simultaneous machinery status update for plant controllers, allowing efficient and effective macro management even when such workers are located thousands of kilometers away from the actual production unit.