China Health : INSIDE INFORMATION

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China Health Group Limited

中國衛生集團有限公司

(Carrying on business in Hong Kong as CHG HS Limited)

(Incorporated in Bermuda with limited liability)

(Stock Code: 673)

INSIDE INFORMATION

This announcement is made by China Health Group 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) of Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

The board of directors (the "Board") of the Company is pleased to announce that on 22 December 2019, the Company entered into a letter of intent (the "LOI") with a company (the "Target") and its 100% beneficial owner (the "Owner") in relation to the potential subscription of new shares in the Target by the Company (the "Possible Subscription"). The Target is a biotechnology company in the Jiangsu Province, the People's Republic of China (the "PRC") and is principally engaged in the research and development and manufacturing of In Vitro Diagnostics products used for early screening of digestive tract tumors such as colorectal cancer (the "Products"). The Target and the Owner are third parties independent of the Company and its connected persons (as defined in the Listing Rules).

Pursuant to the LOI, the Company intends to subscribe for new shares representing 10% of the enlarged issued share capital of the Target in cash for a total subscription price of Renminbi 10 million. The parties also intend that the Company shall also have the option to increase its equity interest in the Target to 30% within the following 12 months. In addition, it is also intended that following the Subscription, the parties shall explore other business cooperation involving the possible formation of joint venture for the distribution of the Products in the PRC. Following the signing of the LOI, the Company shall have the right to perform due diligence review on the Target and engage professional accountant to perform an audit on the financial statements of the Target (the "Audit"). The parties shall negotiate in good faith the detailed terms of the Possible Subscription and the legally binding documentation therefor during the period from the signing of the LOI until one month following the completion of the Audit.

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The Company is principally engaged in medical services and it operates through four segments, namely provision of hospital management services, trading of medical equipment and consumables, business factoring and property investment. The Board considers the Possible Subscription provides an opportunity for the Company to extend its involvement in different segments in the medical field.

The LOI does not create legally binding obligations on the parties to proceed with the Possible Subscription. As at the date of this announcement, the terms of the Possible Subscription have not been finalised and no legally binding agreement has been entered into by the parties. Accordingly, the Possible Subscription may or may not materialise. The Company shall make further announcement(s) if there is any material development on the Possible Subscription.

By Order of the Board

China Health Group Limited

Zhang Fan

Chairman of the Board and Executive Director

Hong Kong, 22 December 2019

As at the date of this announcement, the Board comprises four executive Directors, namely, Mr. Zhang Fan (chairman), Mr. Chung Ho, Mr. Wang Jingming, and Mr. Weng Yu; four non-executive Directors, namely, Mr. Xing Yong, Mr. Huang Lianhai, Mr. Zhang Dawei and Mr. Wang Yongming; and four independent non-executive Directors, namely, Mr. Xiao Zuhe, Mr. Jiang Xuejun, Mr. Du Yanhua and Mr. Lai Liangquan.

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