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MEMORANDUM OF UNDERSTANDING ON CO-OPERATION BETWEEN YELI INTERNATIONAL LIMITED ("YELI") AND HONGPENG FUJIAN SHOES & GARMENTS CO., LTD ("HPFS")("MOU")

We refer to your Company’s announcement dated 8 August 2017, in respect of the aforesaid matter.

In this connection, kindly furnish Bursa Securities with the following additional information for public release:-

1. We note that HPFS is involved in the design, manufacturing and marketing of sports shoes, apparels, accessories and equipment under “XIDELANG” brand whereas YELI is an international shoes trading company.  In this respect, Please clarify clearly whether HPFS will venture into the original design manufacturers for other brands other than “XIDELANG” under the strategic co-operation relationship between HPFS and YELI. If yes, please indicate the customers of YELI i.e. brand owner, whom HPFS will work with in the product specification and development.
2. Given that the strategic co-operation relationship between HPFS and YELI is only at the MOU stage, please provide the basis and justification as well as the level of certainty that the production order from YELI to HPFS over the next 24 months shall not be lower than RMB210 million.
3. Where applicable, please provide also the profit margin that will be attributable to HPFS arising from this arrangement.
4. To further elaborate what is the right of recourse available to HPFS in the event the production orders from Yeli is less than RMB210 million in aggregate for the next twenty-four (24) months.

Please furnish Bursa Securities with your reply within one (1) market day from the date hereof.

Yours faithfully,

HENG TECK HENG
Vice President, Issuers
Listing, Regulation
TGG

Cc : Market Surveillance Dept. , Securities Commission (via fax)