BYD Electronic International : · BYD ELECTRONIC 2019 INTERIM RESULTS ANNOUNCEMENT (2019-08-21)

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.

(incorporated in Hong Kong under the Companies Ordinance with limited liability)

(Stock code: 285)

2019 INTERIM RESULTS ANNOUNCEMENT

The Board of Directors of the Company (the "Board") is pleased to announce the unaudited results of the Company and its subsidiaries for the six months period ended 30 June 2019. This announcement, containing the full text of the 2019 Interim Report of the Company, is prepared with reference to the relevant requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited in relation to preliminary announcements of interim results. Printed version of the Company's 2019 Interim Report will be delivered to the Company's shareholders and is also available for viewing on the websites of Hong Kong Exchanges and Clearing Limited at http://www.hkex.com.hk and of the Company at http://www.byd-electronics. com.

By Order of the Board of

BYD Electronic (International) Company Limited

WANG Nian-qiang

Director

Hong Kong, 21 August 2019

As at the date of this announcement, the executive Directors of the Company are Mr. WANG Nian- qiang and Mr. JIANG Xiang-rong; the non-executive Directors are Mr. WANG Chuan-fu and Mr. WANG Bo; and the independent non-executive Directors are Mr. CHUNG Kwok Mo John, Mr. Antony Francis MAMPILLY and Mr. QIAN Jing-jie.

MANAGEMENT DISCUSSION AND ANALYSIS

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

Revenue	19.32%	to RMB23,280 million
Gross profit	-21.96%	to RMB1,551 million
Profit attributable to owners of the parent	-49.31%	to RMB575 million
Earnings per share	-49.31%	to RMB0.26

HIGHLIGHTS

• Strategic cooperation with clients further enhanced with the glass, plastic and handset assembly businesses continuing to grow
• The competitiveness of products continued to improve, with the Group becoming one of the leading manufacturers in terms of metal, plastic, glass and ceramics components and handset assembly business
• The development of new intelligent product business and automotive intelligent systems boomed and maintained rapid growth
• Under the background of China-US disputes, mobile handset was at the trough before 5G handset shifting tide, metal business revenue was under temporary pressure
• Client base was diversified with the Group's penetration into the core product line of major clients in the Northern America, achieving business breakthrough

BYD ELECTRONIC (INTERNATIONAL) COMPANY LIMITED	1
INTERIM REPORT 2019

MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRY REVIEW

For the six months ended 30 June 2019 (the "Period"), China-US trade friction was escalated and the impetus for global economic activities remained weak. The International Monetary Fund forecast that the global economic growth in 2019 will slow down to 3.2%. Chinese economy remained generally stable and prosperous with the GDP increasing by 6.3% in the first half of 2019.

According to the statistical data from IDC (an international research institution), the global smartphone shipments reached 644 million units in the first half of 2019, down by 4.4% year-on-year, and according to the data released by the China Academy of Information and Communications Technology* (中國信息通信研究院), the aggregated handset shipments in China amounted to 186 million units in the first half of 2019, down by 5.1% year-on-year. Smartphone shipments, in particular, dropped by 4.3% year-on-year to 178 million units.

During the Period, the global smartphone market performed weakly, deepening the competition in the industry and putting pressure on the whole industry. At the same time, the trade disputes between China and the US also had negative impact on certain handset brand manufacturers, which has further spread to upstream component manufacturers and assembly services suppliers, with the entire handset industry affected in different degrees. In order to boost consumption willingness against the backdrop of declined industry prosperity, handset manufacturers sped up their innovation and product upgrading, launching new models with multiple cameras and foldable screen and diversifying exterior decoration options including 3D glasses and ceramic casings. Meanwhile, as the industry has gone through years of development, consumers also call for higher handset quality with stronger demand for new materials and exquisite production technology. All of these factors brought about more favorable opportunities and broad development space for those manufacturers with rich experience and comprehensive technology.

BUSINESS REVIEW

BYD Electronic (International) Company Limited ("BYD Electronic" or the "Company") and its subsidiaries (which are collectively referred to as the "Group") is a leading global provider of intelligent product solutions, providing customers with one-stop service that comprises development of new materials, product design and development, manufacturing, supply chain management, logistics and after-sales service. In the context that 5G will soon be commercialized, the Group had closely followed the demands of the market and customers as well as industry hotspots and accelerated the transformation and upgrade of its business. Its proactive strategy includes the three major business segments, smartphones and notebook PCs, new intelligent products and automotive intelligent systems. The Group's international large-scale automated production lines cover the production of molds, and components such as metal and plastic parts, 3D glass and ceramics and manufacture of electronic products. Under the circumstances of complex and ever-changing economic situation domestic and abroad, China-US trade frictions that resulted in some orders from its clients being affected and the overall industry being put under pressure, the Group operates its business stably while actively carrying out various businesses, which had driven the growth in the Company's revenue. For the Period, the Group recorded turnover of approximately RMB23,280 million, representing

1. year-on-yearincrease of 19.32%; profit attributable to shareholders was RMB575 million, down by approximately 49.31% compared to that in 2018.

2 BYD ELECTRONIC (INTERNATIONAL) COMPANY LIMITED INTERIM REPORT 2019

MANAGEMENT DISCUSSION AND ANALYSIS

During the Period, the Group continued to enhance its strategic cooperation with clients, expand production capacity and increase its market share, with the 3D glass, plastic and handset assembly businesses continuing to grow. As 5G technology application progresses, 3D glass was widely used. The Group has has been closely working with six major global Android brands, and become one of the leading manufacturers in the industry. Leveraging on its advantages including leading technology、production capacity and excellent quality of metal components, the Group further improved its market penetration and kept up its leading position in the industry. However, against the backdrop of China-US trade disputes, the industry has been under pressure and the demand from certain clients had been impacted, resulting in temporary impact on revenue of metal component business. For the six months ended 30 June 2019, revenue from handset and notebook PC business amounted to RMB19.921 billion, accounting for 85.57% of overall revenue. Among which, revenue from component business amounted to RMB8.056 billion and revenue from assembly business amounted to RMB11.865 billion.

In terms of the new intelligent product business, the Group continued to increase its investment, adopt proactive market expansion strategies and deepen the cooperation with clients, which impelled the continuous rapid growth of the business. During the Period, the Group's revenue from the new intelligent product business amounted to approximately RMB2.598 billion, accounting for 11.16% of the total revenue.

In terms of the automotive intelligent system business, with the sharp rise in the sales volume of new energy vehicles of the parent company, the shipment volume of automotive intelligent systems has increased significantly year-on- year. The Group has deepened its cooperation with international Tier 1 manufacturers, which drove the continuous and rapid increase of its revenue. During the Period, revenue from the automotive intelligent business of the Group amounted to approximately RMB761 million, accounting for 3.27% of the total revenue.

BYD ELECTRONIC (INTERNATIONAL) COMPANY LIMITED	3
INTERIM REPORT 2019

MANAGEMENT DISCUSSION AND ANALYSIS

STRATEGY FOR FUTURE DEVELOPMENT

Looking ahead to second half of the year, global political landscape is still clouded by uncertainties with the global economy to be affected by trade conflicts, exchange rate volatility and geopolitical risks. Under the circumstances that the macroeconomy is under pressure, competition in the handset industry further deepened, which facilitated the concentration of high-quality client resources and industry demands to leading manufacturers and brought about new development opportunities for the Group. According to forecast by IDC, global smartphone shipments are expected to decrease by 1.9% to 1,380 million units in 2019 before the shipment's growth accelerates. It is expected that global smartphone shipments in 2023 will reach 1,540 million units, which is likely to usher in new growth for the Group's businesses. At the same time, the Group has successfully penetrated into the core product line of major clients in the Northern America, achieving breakthrough, diversifying its client base and creating tremendous room for the Group's future business growth. As the commercialization of 5G accelerates, the launch of 5G smartphones will usher in a new cycle of handset replacement. According to the forecast of IDC, the global 5G phone shipments in 2019 is 6,700,000 units, and the 5G phone shipments in 2023 is expected to reach 26% of all phone shipments. Compared with 4G phones, the manufacture of 5G phones and the components are more challenging. The requirement of manufacturing precision and product performance of metal, plastic and glass components of 5G phones are higher, which is expected to increase the added-value of handset products. The Group had been well prepared in terms of the innovative materials and the technologies for production, processing and exterior design. The Group will certainly seize the opportunity and drive its business into a new growth cycle. The Group also approached component business of renowned notebook brands, which is expected to drive the growth in revenue from related business.

The IDC China Intelligent Home Equipment Market Quarterly Tracker published by IDC predicts that, the intelligent home equipment market in China will continue growing rapidly over the next five years. The market scale will reach nearly 500 million units, which suggests huge market potential. The global market scale of the intelligent home business will reach 840,000,000 units, and it is expected to grow to 1,460,000,000 units in 2023, with a compound growth rate of 14.9%. The Group will seize the opportunity of rapid development of the market, leverage on the advantage of vertical integration of R&D, supply and manufacturing, actively plan its product layout and increase investment in the market so as to support the sustainable and rapid development of its new intelligent product business.

In terms of the automotive intelligent systems, although it is still in its infancy, its development will usher in a new era of intelligence following electrification of vehicles, including self-driving of vehicles and artificial intelligence experience. The future application scenarios of intelligent automobiles are remarkably extensive. According to the forecast of China Society of Automotive Engineers, the connectivity rate of new vehicle models sold in China in 2025 will reach 80%, and the sales volume of internet-connected vehicles will reach 28,000,000 units. The trend will usher in the rapid development of intelligent vehicles. The Group will continue to increase its R&D investment to expand into various product lines, including intelligent networking system, intelligent car cockpit and self-driving system. On the basis of the rapid business growth with the parent company, the Group also proactively expanded into other foreign and domestic automotive OEMs. As market exploration is further deepened, the Group's automotive intelligent system business will keep up the trend of rapid development.

The Group is confident about the future. It will continue to increase its R&D investment, facilitate the innovation of its products, promote automatic production and lean production, deepen the strategic cooperation with clients in three major business segments and expand its business scope so as to lay a solid groundwork for the Group's long-term development and create substantial return for shareholders and investors.

4 BYD ELECTRONIC (INTERNATIONAL) COMPANY LIMITED INTERIM REPORT 2019