''Strengthening Regional Advantages to Solidify Market Leadership,'' Lianhua Supermarket Announces 2006 Interim Results.

HONG KONG -- Finance and Business Highlights

--Turnover RMB8,350.6 million, increase by 21.2%

--Profit attributable to shareholders RMB138.4 million, up by 5.6%

--Earnings per share was RMB0.22

--The Board recommended an interim dividend of RMB0.06 per share

--Number of outlets, reached 3708, a net increase of 99

Lianhua Supermarket Holdings Co.,Ltd. ("Lianhua Supermarket" or the "Company", together with its subsidiaries, collectively the "Group"; HKEx stock code: 980) today announced its unaudited interim results for the 6 months ended 30 June 2006 (the "Review Period" or the "Period").

During the Review Period, Lianhua Supermarket maintained stable growth. Turnover for the Group reached RMB8,350.6 million, a 21.2% increase over a turnover of RMB6,890.0 million in the corresponding period in 2005. Net profit attributable to shareholders were RMB138.4 million, 5.6% higher than the corresponding period in 2005. Earnings per share was RMB0.22.

The Board recommended an interim dividend of RMB0.06 per share for the period.

Mr. Wang Zongnan, Chairman of the Group, commented: "During the period under review, the domestic retail sector's inherent attraction resulted in increasingly intense competition, especially as the PRC market was fully open to foreign investments. The rapid expansion strategy of retailers encountered more challenges, creating a need to enhance operational efficiency. The fiercest competition occurred between leading domestic and foreign market players, with established chain retailers capturing increased market share. In this context, for the first half of 2006, the Group has continued to adhere to its centralized development strategy and maintained a steady expansion of its network."

During the period under review, the Group has maintained its leading position in the retail sector by optimizing its regional strategic expansion, thus improving its competitive edge. For the six months ending June 30th, 2006, the Group remained dominant in the retail sector, operating a total of 3708 direct outlets and franchises, including 1765 franchised outlets.

Based on the successful trial transformation cases, the Group continued to proceed with the transformation of its supermarket stores. Meanwhile, based on the development of the in-depth transformation, the Group's supermarkets and stores also emphasized the transformed stores' ability in continuous improvement, further improved their operating mechanism in a scientific way, focusing on the enhancement of transformed stores' quality. The comprehensive operation management capability for supermarket business was also strengthened. During the period, an additional 36 directly operated supermarkets have completed their transformation, with a year-on-year increase of 37% in sales for the transformed outlets. Totally, 46 directly operated supermarkets have completed their transformation, with a year-on-year increase of 45% in sales for the total transformed outlets.

During the period under review, the Group has further developed its supply chain management platform. 855 new suppliers have joined the B2B system and the total number of online suppliers reached 2585. The Group strengthened cost control in order to face market challenges.

Hypermarkets are the Group's principal business. During the period, Hypermarkets accounted for approximately 52.72% of turnover of the Group. Segment turnover of the Group's hypermarket business was approximately RMB4,403 million. Operating profit was approximately RMB22.73 million and the number of hypermarkets of the Group reached 101.

Supermarkets remained the most mature business segment in the Group's retail chain business and major profit contributor for the Group. During the period, segment turnover for the supermarket business was approximately RMB3,174 million, accounting for approximately 38.01% of the Group's turnover. Operating profit was approximately RMB113.9 million and the Group's supermarkets amounted to 1628. The number of directly operated supermarkets reached 657, while franchised supermarkets stood at 971.

The convenience store business was concentrated in six cities, namely Shanghai, Beijing, Guangzhou, Dalian, Hangzhou and Ningbo, which are economically more developed and enjoy stronger consumer spending power as the income of their residents is relatively higher. During the period, segment turnover of the Group's convenience business was approximately RMB748 million, accounting for approximately 8.96% of the total turnover of the Group. Operating profit was approximately RMB16.16 million. The total number of convenience stores amounted to 1,979.

Mr. Wang Zongnan continued: "The hypermarket business is one of the most competitive sectors in the food retail industry in China but is also the business segment of the Group with the most potential. The Group has strengthened its cooperation with suppliers and entered into strategic alliances with a number of them. The Group will further enhance purchasing capability and create economies of scale."

Mr. Wang concluded: "Looking forward, we expect competition to remain keen in 2006. Keeping in mind our goal of internationalization, the Group will strive to strengthen its advantages in the local market, optimize its national network, enhance its core competitive edge and focus on its three core operations. In order to meet consumers' needs, further strengthen its leading position in the country and expand its market share in China, the Group will continue to pursue its centralized development strategy, extend the transformation of supermarket business, enhance profitability, improve supply chain systems, control cost strictly, and improve overall performance.

About Lianhua Supermarket

Lianhua Supermarket Holdings Co., Ltd. ("Lianhua Supermarket" or the "Company") is China's leading supermarket chain. Established in Shanghai in 1991, it is now a retail chain operator with a nationwide retail network. It has grown organically as well as through franchise arrangements and acquisitions. As of June 30, 2006, Lianhua Supermarket operated 3,708 stores in 21 provinces and municipalities. It operate the "Century Mart" chain of hypermarkets, "Lianhua" supermarkets and "Lianhua Quik" convenience stores. The Franchise Committee of the PRC Retail Chain Operators Association has recognized "Lianhua Supermarket" and "Lianhua Quik" through its awards for supermarket and convenience store excellence. Lianhua Supermarket was listed on the Hong Kong Stock Exchange on June 27, 2003.