Weiqiao Textile Announces 2007 Annual Results

Implemented Effective Cost Control Measures and Achieved Steady
Results

-- Revenue was RMB18,590,000,000, down 6.2%

-- Gross profit was RMB 2,662,000,000, down 19.9%

-- Net profit attributable to shareholders was RMB1,868,000,000,
up 10.9%

-- Basic earnings per share were RMB1.56, up 9.1%

-- Proposed final dividend of approximately RMB 0.50 per share,
up 13.6%
HONG KONG--(Business Wire)--
Weiqiao Textile Company Limited ("the Company" or "Weiqiao
Textile") and its subsidiaries, collectively the "Group") (HKEX:
2698), the largest cotton textile producer in China, today announced
its annual results for the period ended December 31, 2007 (the
"Period").

During the year under review, the demand in the textile market
decreased owing to the appreciation of the renminbi, the decrease in
the export tax refund rate and macroeconomic control measures. Revenue
of the Group decreased 6.2% to RMB18,590,000,000 compared with 2006.
Gross profit decreased 19.9% to RMB2,662,000,000. Net profit
attributable to shareholders rose 10.9% to RMB1,868,000,000. Basic
earnings per share were RMB 1.56, 9.1% higher than that of last year.
The Board of Directors proposed a final dividend of approximately
RMB0.50, up 13.6% compared with 2006.

Commenting on the annual results performance, Ms. Zhang Hongxia,
Chairman of Weiqiao Textile, said, "In 2007, reductions in exports and
the rises in production costs led to more intense market competition.
The appreciation of the renminbi, the changes to the export tax refund
policy and a rise in raw materials costs all posed certain challenges
for the textile industry in China. Despite poor market conditions, the
Group achieved steady results in a challenging textile market, in part
as a result of effective cost control measures. Leveraging on our
economies of scale and technological transformation, we successfully
increased operating efficiencies by improving equipment and facilities
and optimizing our product mix."

Operations Review

In 2007, exports of textile products and clothing in China grew
steadily albeit at a reduced growth rate. According to Customs
statistics, exports of textile products and clothing amounted to
US$175.6 billion in 2007, an increase of 19.11% over 2006 with a drop
of six percentage points in the growth rate. Exports of cotton textile
products and clothing amounted to US$72.063 billion, an increase of
28.69% over 2006, while the growth rate dropped by 7.5 percentage
points.

The Group continued to pursue its course in industry enhancement
and to strengthen the sales of its core products and optimize product
mix. Cotton yarn, grey fabric and denim remained the Group's core
products by sales volume. Their sales accounted for 45.1%, 47.8% and
6.9% of the Group's total revenue respectively. The following table
provides a breakdown of revenue by product categories:

-0-
*T
Products Revenue Revenue Change Gross Gross
in 2007 in 2006 % margin in margin in
(RMB million) (RMB million) 2007 2006
(%) (%)
----------------------------------------------------------------------
Cotton
yarn 8,385 8,291 1.1 13.3 13.6
----------------------------------------------------------------------
Grey
fabric 8,896 9,812 (9.3) 14.3 19.1
----------------------------------------------------------------------
Denim 1,274 1,669 (23.6) 20.4 18.7
----------------------------------------------------------------------
Others 34 54 (36.5) 22.3 23.7
----------------------------------------------------------------------
Total 18,589 19,826 (6.2) 14.3 16.8
----------------------------------------------------------------------
*T

In 2007, the Group's production volume of cotton yarn, grey fabric
and denim were 891,000 tons, 1,646,000,000 meters and 180,000,000
meters respectively.

In 2007, the percentage of domestic sales of the Group dropped
slightly as the textile and apparel exporters in China were affected
by the export slowdown. Revenue by region was:

-0-
*T
Regions Revenue Revenue Change Sales
In 2007 In 2006 (%) proportion for
(RMB million) (RMB million) 2007
----------------------------------------------------------------------
PRC 10,955 13,001 (15.7) 58.9%
----------------------------------------------------------------------
Hong Kong 3,304 2,987 10.6 17.8%
----------------------------------------------------------------------
East Asian
Regions 1,876 1,894 (0.9) 10.1%
----------------------------------------------------------------------
Other regions 2,455 1,944 26.3 13.2%
----------------------------------------------------------------------
Total 18,590 19,826 (6.2) 100%
----------------------------------------------------------------------
*T

During the year under review, the Group continued to actively
expand its market share and explored new markets. As at 31 December
2007, the Group had a total of 8,000 domestic customers and over 780
overseas customers, up 6.7% and 8.3% respectively from 2006.

Gross profit and gross profit margin

For the twelve months ended 31 December 2007, the Group's gross
profit margin decreased to 14.3%, compared with 2006. The decrease was
mainly attributable to a decrease in the gross profit margin as the
Company cut prices in response to a decline in market demand due to
several unfavourable factors such as the appreciation of the renmimbi,
a reduction in the tax refund rate and macroeconomic control policy.

Selling and Distribution Costs

The Group's selling and distribution expenses increased by 14.2%
to approximately RMB410,000,000 for the year ended 31 December 2007
from approximately RMB359,000,000 for the previous year. Of which,
transportation cost increased by 16.4% to approximately RMB320,000,000
from approximately RMB275,000,000 for 2006 due to an increase in unit
transportation cost as a result of an increase in domestic oil prices.
Sales commission decreased by 5.6% to approximately RMB34,000,000 from
approximately RMB36,000,000 for 2006. This was attributable to a
reduction in the payment of commissions as a result of a decrease in
sales volume through agents as the Company further stepped up its
efforts in developing the market on its own.

Administrative Expenses

Administrative expenses for the year ended 31 December 2007
totaled to approximately RMB197,000,000, representing an increase of
11.3% from compared with approximately RMB177,000,000 for the previous
year. This was attributable to the enhancement of employees' benefits
by the Company.

Finance Costs

For the year ended 31 December 2007, finance costs of the Group
were approximately RMB726,000,000, which was basically unchanged from
2006. This was attributable to the fact that the reduction in interest
expenses due to a decrease in the Group's interest-bearing bank
borrowings. This basically offset the increase in interest expenses
that was caused by an increase in lending rates of financial
institutions.

Acquisition of Thermal Power Assets

The Group has obtained shareholders approval at an EGM held on 18
March 2008 to acquire thermal power assets from Shandong Weiqiao
Chuangye Group Company Limited for a cash consideration of RMB
2,210,000,000. The thermal power assets have an installed electricity
generation capacity of about 600 MW and steam generation capacity of
about 2,480 tons per hour. This acquisition will stabilize power
supply and help meet the Group's growing demand for electricity and
steam. It will also help the Group improve operation efficiency and
competitiveness, reduce costs as well as enhance profitability.

Outlook

Weiqiao Textile's Chairman, Ms. Zhang said, "We expect market
conditions to remain challenging in 2008 for the entire industry,
which will present opportunities. We believe that we have the
strengths necessary to capture such opportunities and develop the
domestic and overseas markets at the same time. Weiqiao Textile will
strive to expand the range of its medium and high-end products to
maintain and strengthen its position as the first-choice supplier in
China and even around the world for global buyers. In the meantime, we
will continue to consolidate the outstanding image of the "Weiqiao"
brand name, actively upgrade our production facilities and improve
operating efficiency so as to continuously enhance our core
competitiveness."

"In addition to the cost savings generated by the newly acquired
thermal power assets, we will continue to implement other cost control
measures to improve profitability and will continuously enhance
shareholder value" concluded Ms. Zhang.

About Weiqiao Textile

Weiqiao Textile Company Limited, a non state-owned enterprise, is
the largest cotton textile producer in the PRC, specializing in the
production, sales and distribution of cotton yarn, grey fabric and
denim. During the past ten years, the Group developed large-scale
production capabilities by capitalizing on China's rapid economic
growth. It has achieved strong positioning in the global textile
markets by employing advance technology in state-of-the-art
facilities.

Weiqiao Textile is located in Shandong, China's second largest
cotton producing province. The Group has four production bases in
Weiqiao, Binzhou, Weihai and Zouping and employs approximately 135,000
people. As at December 31, 2007, the Group produced 891,000 tons of
cotton yarn, 1,646,000,000 meters of grey fabric and 180,000,000
meters of denim.

Disclaimer

This press release distributed herewith includes forward-looking
statements. All statements, other than statements of historical facts,
that address activities, events or developments that Weiqiao Textile
expects or anticipates will or may occur in the future (including but
not limited to projections, targets, estimates and business plans) are
forward-looking statements. Weiqiao Textile's actual results or
developments may differ materially from those indicated by these
forward-looking statements as a result of various factors and
uncertainties, including but not limited to price fluctuations, actual
demand, exchange rate fluctuations, market shares, competition,
environmental risks, changes in legal, financial and regulatory
frameworks, international economic and financial market conditions,
political risks, project delay, project approval, cost estimates and
other risks and factors beyond our control. In addition, Weiqiao
Textile makes the forward-looking statements referred to herein as of
today and undertakes no obligation to update these statements.

Christensen
Mr. Hon Fung, (852) 2232 3933/ 6335 5933
Fax: (852) 2117 0869
fhon@ChristensenIR.com
or
Ms. Karin Chan, (852) 2232 3913/ 6504 3773
Fax: (852) 2117 0869
kchan@ChristensenIR.com

Copyright Business Wire 2008