Honghua : SUPPLEMENTAL CIRCULAR TO ANNUAL GENERAL MEETING IN RELATION TO CONTINUING CONNECTED TRANSACTION AND MAJOR TRANSACTION - FINANCIAL COOPERATION AGREEMENT AND SUPPLEMENTAL NOTICE OF ANNUAL GENERAL MEETING

THIS SUPPLEMENTAL CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this Supplemental Circular or as to the action to be taken, you should consult your licensed securities dealer or registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your securities in Honghua Group Limited, you should at once hand this Supplemental Circular and the accompanying supplemental form of proxy to the purchaser or the transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

Hong Kong Exchange and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this Supplemental Circular, 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 Supplemental Circular.

Honghua Group Limited

宏 華集團有限 公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 196)

SUPPLEMENTAL CIRCULAR TO ANNUAL GENERAL MEETING IN

RELATION TO CONTINUING CONNECTED TRANSACTION

AND MAJOR TRANSACTION -

FINANCIAL COOPERATION AGREEMENT

AND

SUPPLEMENTAL NOTICE OF ANNUAL GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee

and the Independent Shareholders

This Supplemental Circular should be read in conjunction with the circular of Honghua Group Limited (the "Company") dated 20 April 2021, and the announcement of the Company dated 12 May 2021 in respect of postponement of the AGM.

A letter from the Board is set out on pages 4 to 13 of this Supplemental Circular. A letter from the Independent Board Committee is set out on page 14 of this Supplemental Circular. A letter from Gram Capital, the independent financial adviser to the Independent Board Committee and the Independent Shareholders containing its advice in relation to the Transactions is set out on pages 15 to 26 of this Supplemental Circular.

The supplemental notice of AGM is set out on pages 35 to 36 in this Supplemental Circular. The AGM of the Company will be held as originally scheduled to be held at 10/F, United Centre, 95 Queensway, Admiralty, Hong Kong on Tuesday, 1 June 2021 at 10:00 a.m.. If you do not propose to attend the AGM, you are requested to complete the enclosed supplemental form of proxy in accordance with the instructions printed thereon and return it to the Company's branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the AGM or any adjournment thereof. Completion and return of the supplemental form of proxy will not preclude you from attending and voting in person at the AGM or any adjourned meeting if you so wish, and in such event, the supplemental form of proxy shall be deemed to be revoked.

13 May 2021

		CONTENTS
			Page
Definitions . . . .	. . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Letter from Gram Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Appendix I	-	Financial Information of the Group . . . . . . . . . . . . . . . . . .	27
Appendix II	-	General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30
Supplemental Notice of Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . .	35

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DEFINITIONS

In this Supplemental Circular, unless the context otherwise requires, the following expressions have the following meanings:

"Aerospace Science and Industry	Aerospace Science and Industry Financial Corporation, a
Financial Corporation"	company incorporated in the PRC with limited liability,
	and a non-bank financial institution established by
	CASIC and its subsidiaries;
"AGM"	the annual general meeting of the Company to be held at
	10/F, United Centre, 95 Queensway, Admiralty, Hong
	Kong on Tuesday, 1 June 2021 at 10:00 a.m. for the
	purpose of, inter alia, considering and approving the
	Financial Cooperation Agreement;
"associate(s)"	has the meaning ascribed to it under the Listing Rules;
"Board"	the board of Directors;
"business day(s)"	a day on which banks are generally open for business in
	Hong Kong (other than a Saturday, Sunday or public
	holiday or a day on which a tropical cyclone warning No.
	8 or above or a "black rainstorm warning signal" is
	hoisted or remains hoisted in Hong Kong at any time
	between 9: 00 a.m. and 5: 00 p.m.);
"CASIC"	China Aerospace Science and Industry Corporation (中國
	航天科工集團有限公司), a company incorporated in the
	PRC;
"Company"	Honghua Group Limited, a company incorporated in the
	Cayman Islands with limited liability, the Shares of
	which are listed on the Main Board of the Stock
	Exchange of Hong Kong Limited;
"connected person(s)"	has the meaning ascribed to it under the Listing Rules;
"Director(s)"	director(s) of the Company;
"Existing Financial Cooperation	the financial cooperation agreement for the provision of
Agreement"	financial services dated 1 June 2018 entered into between
	the Company and Aerospace Science and Industry
	Financial Corporation;

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	DEFINITIONS
"Financial Cooperation	the financial cooperation agreement for the provision of
Agreement"	financial services dated 12 May 2021 entered into
	between the Company and Aerospace Science and
	Industry Financial Corporation;
"Group"	the Company and its subsidiaries;
"Hong Kong"	the Hong Kong Special Administrative Region of the
	People's Republic of China;
"Independent Board Committee"	the independent committee of the Board, comprising all
	the independent non-executive Directors, established to
	make recommendations to the Independent Shareholders
	in respect of the Financial Cooperation Agreement and
	the annual caps of the deposit services and lending and
	other comprehensive credit facilities services thereunder;
"Independent Financial Adviser"	Gram Capital Limited, being the independent financial
or "Gram Capital"	adviser appointed to advise the Independent Board
	Committee and the Independent Shareholders in respect
	of Financial Cooperation Agreement and the annual caps
	of the deposit services and lending and other
	comprehensive credit facilities services thereunder;
"Independent Shareholder(s)"	Shareholder(s) other than CASIC and its associates;
"Independent Third Party(ies)"	person(s) or company(ies) which is/are not connected
	(within the meaning of the Listing Rules) with the
	Company;
"Kehua"	Kehua Technology Co., Limited, a limited liability
	company incorporated in Hong Kong and a wholly-
	owned subsidiary of CASIC;
"Latest Practicable Date"	12 May 2021, being the latest practicable date prior to the
	printing of this Supplemental Circular for the purpose of
	ascertaining certain information contained herein;
"Listing Rules"	the Rules Governing the Listing of Securities on the
	Stock Exchange;
"Original Circular"	the circular of the Company dated 20 April 2021;
"PBOC"	The People's Bank of China;

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	DEFINITIONS
"PRC"	the People's Republic of China;
"RMB"	Renminbi, the lawful currency of the PRC;
"SFO"	the Securities and Futures Ordinance (Chapter 571 of the
	laws of Hong Kong);
"Share(s)"	the ordinary share(s) of HK$0.1 each in the share capital
	of the Company;
"Shareholder(s)"	holder(s) of ordinary share(s) of nominal value of
	HK$0.10 each in the share capital of the Company;
"Stock Exchange"	The Stock Exchange of Hong Kong Limited;
"Supplemental Circular"	this supplemental circular;
"Transactions"	the deposit services and the lending and other
	comprehensive credit facilities services contemplated
	under the Financial Cooperation Agreement; and
"%"	per cent.

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