China Shengmu Organic Milk : Issue of Domestic Short-term Debentures in the PRC by Inner Mongolia Shengmu High-tech Farming Co., Ltd* An Indirect Wholly-owned Subsidiary of the Company

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.

CHINA SHENGMU ORGANIC MILK LIMITED

中 國 聖 牧 有 機 奶 業 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1432) ISSUE OF DOMESTIC SHORT-TERM DEBENTURES IN THE PRC BY INNER MONGOLIA SHENGMU HIGH-TECH FARMING CO., LTD* (內蒙古聖牧高科牧業有限公司) AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF THE COMPANY

This announcement is made by the Board of the Company pursuant to Rule 13.09(2) of the Rules Governing the Listing of Securities on the Stock Exchange of the Hong Kong Limited (the "Listing Rules") and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571, Laws of Hong Kong).

ISSUANCE OF DOMESTIC SHORT-TERM DEBENTURES IN THE PRC

The Board is pleased to announce that the Issuer has obtained the approval from the National Association of Financial Market Institutional Investors to issue domestic short-term debentures of an aggregate principal amount up to RMB1.7 billion in PRC, and completed the issuance of the first tranche of Debentures of an aggregate principal amount of RMB0.4 billion on 23 June 2017 with a term of 270 days from the date of issuance. The interest rate of the first tranche of the Debentures is 6.5% per annum which was determined at the end of the subscription period through bookbuilding and placing processes.

The first tranche of the domestic short-term debentures have been issued to domestic institutional investors in the PRC (other than those who are restricted from participating in such offering in accordance with the laws and regulations of the PRC). China Merchants Bank Co. Limited (招商銀行股份有限公司) is the lead underwriter and bookrunner, and Bank of Communications Limited is the co-lead underwriter, for the issue of the first tranche of the domestic short-term debentures.

The principal terms of the first tranche of the domestic short-term debentures to be issued are as follows:

Issuer : Inner Mongolia Shengmu High-tech Farming Co., Ltd* (內蒙古聖牧高科牧業有限公司)

This tranche of the short-term debentures

: RMB0.4 billion

Place of issue : The Inter-bank Bond Market in the PRC Maturity : 23 March 2018

Credit Rating : As assessed by China Cheng Xin International Credit

Rating Co. Ltd*(中誠信國際信用評級有限責任公司), the Issuer has been given an AA rating.

Interest rate : 6.5% per annum

Interest

calculation and payment

: The interest of this tranche of the short-term debentures is calculated at a fixed interest rate of 6.5% per annum, by way of simple interest from 26 June 2017 to the maturity date of the Debentures, and shall be paid upon such maturity.

Use of proceeds : The proceeds from the issue of this tranche of the

short-term debentures shall be used for general working capital of the Issuer and its subsidiaries.

Trading

arrangements

: This tranche of the short-term debentures will be traded on the Inter-bank Bond Market in the PRC from 27 June 2017.

Following the issuance of this tranche of the short-term debentures, the Issuer may issue further the short-term debentures within a period of two years from the date of the approval from the Association to issue the short-term debentures of an aggregate principal amount up to RMB1.7 billion in the PRC, which was obtained by the Issuer on 30 November 2016, subject to the filing with the Association, and issuance of, new issue documents for the short-term debentures.

In accordance with the relevant laws and regulations in the PRC, relevant documents in relation to the Issuer and the short-term debentures will be published on the websites of Shanghai Clearing House (www.shclearing.com) and China Foreign Exchange Trade System (www.chinamoney.com.cn). Shareholders and potential investors are reminded that such documents were prepared in accordance with the requirements in the PRC and are limited solely to the Issuer, and the information contained therein does not provide a full picture of the operations status of the Group.

DEFINITIONS

"Association" the National Association of Financial Market Institutional Investors, a self-regulated organisation supervising the issuance of corporate bonds and notes among banks in the PRC

"Board" board of directors

"Company" China Shengmu Organic Milk Limited, a company incorporated in the Cayman Islands with limited liability, the issued shares of which are listed on the Main Board of the Stock Exchange (stock code: 1432)

"Group" the Company and its subsidiaries from time to time

"Hong Kong" The Hong Kong Special Administrative Region of the PRC

"Issuer" Inner Mongolia Shengmu High-tech Farming Co., Ltd* (內蒙古聖牧高科牧業有限公司), a company incorporated in the PRC and an indirect wholly-owned subsidiary of the Company

"PRC" the People's Republic of China, which for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

"RMB" Renminbi, the lawful currency of the PRC

"Shareholder(s)" shareholder(s) of the Company

"Stock Exchange" The Stock Exchange of Hong Kong Limited

On behalf of the Board

China Shengmu Organic Milk Limited Yao Tongshan

Chairman

Hong Kong, 28 June 2017

As at the date of this announcement, the executive Directors of the Company are Yao Tongshan, Wu Jianye, Gao Lingfeng and Cui Ruicheng; and the non-executive Directors of the Company are Dong Xianli, Fan Xiang, Cui Guiyong, Sun Qian, Shao Genhuo and Zhang Jiawang; and the independent non-executive Directors of the Company are Li Changqing, Ge Xiaoping, Fu Wenge, Wang Liyan and Li Xuan.