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All colleagues and partners of Kailong Hi-Tech:

The Year of the Rabbit bids farewell, and the Year of the Dragon welcomes the new spring. At this wonderful moment of "the beginning of a New Year and the renewal of all things", the board of directors of Kailong High-Tech extends its best wishes to all the hardworking and selfless employees and their families! We would like to express our sincere gratitude to all the leaders and partners from all walks of life who have been concerned about and supported the company's operation and development all along!

Through wind and rain, we toil and reap the rewards

Over the past year, the whole country has united to restore the economy and accelerate development. Amid the wave of building a new pattern, the automotive industry has also witnessed adjustments in its industrial chain, with extremely fierce competition. Under the overall planning of the company's management and the efforts of all colleagues, the company has overcome the unfavorable factors of the domestic and international macro environment, tackled difficulties with determination and perseverance, and embarked on a new journey of high-quality development for the enterprise! In 2023, the achievements made by the company are as follows:

In 2023, benefiting from the explosive growth of the commercial vehicle market, especially the natural gas heavy-duty truck market, as well as the implementation of the non-road National IV and light vehicle National VI b regulations, Kailong Hi-Tech Group achieved its annual revenue target. Facing the pressure brought by expenses such as the conversion from fundraising to fixed assets and the depreciation/amortization of fixed assets, the company has continuously optimized the product structure, introduced cost reduction and efficiency improvement measures, and enhanced the level of lean management. As a result, the overall gross profit margin has also achieved a significant improvement compared to last year. Meanwhile, the company's period expense control has also decreased compared with the same period last year. The company's various business indicators have been gradually improving, and its net profit has also turned from loss to profit!

In 2023, the company established Jiangsu Guanlan New Materials Technology Co., Ltd. and introduced 100 million yuan of industrial funds from the Jiangdu District Government of Yangzhou. It fully entered the field of silicon carbide new materials and built a silicon carbide new materials industrial park. Meanwhile, the company has organized a silicon carbide operation team to comprehensively study and deploy the application of silicon carbide new materials in areas such as kiln rods in the new energy industry, bulletproof plates in the military industry, heat exchange equipment in the chemical field, and silicon powder materials.

In 2023, the company established Jiangsu Ourisen Inspection and Testing Co., Ltd. and Jiangsu Xiling Precision Manufacturing Co., LTD. The company will vigorously expand the external market and undertake external orders to strengthen and expand its business.

In 2023, Kailong Lanfeng's VOCs business achieved its first external sales. The proportion of external sales of Kailong Baodun has exceeded 60% for the first time, and the production lines for new products such as air conditioning pipelines and battery water-cooled units are about to be put into operation.

In 2023, the company received various project approvals worth 9.45 million yuan from the national, provincial and municipal levels. It was also successfully approved for the Jiangsu Province Key Technological Innovation Project Guidance Plan, Major Key Technology Research and Development, and Innovation Capacity Building Project. For the first time, the company was approved as a key laboratory of enterprises in Wuxi City, and was recognized as a national patent-intensive product, a national patent navigation enterprise, and a national intellectual property advantage enterprise. It was first approved as an Internet benchmark enterprise in Jiangsu Province, an intelligent workshop in Jiangsu Province, and a demonstration enterprise for the integration of informatization and industrialization in Jiangsu Province.

In 2023, the company was successfully awarded the titles of "Jiangsu Province May Day Labor Award", "Jiangsu Province Model Unit for Factory Affairs Disclosure and Democratic Management", "Demonstration Enterprise for Reform of Industrial Workers' Team Building in Huishan District, Wuxi City", "Demonstration Point for Women Workers' Carnation Service Station in Wuxi City", and "Demonstration Unit for Model Workers' Home Construction in Wuxi City". He/She has also been honored with titles such as "Outstanding Entrepreneur of Jiangsu Province", "Shi Shaoxi Talent Award", "Innovative Talent of Taihu Lake in Wuxi City", and "Hui · Pengfei" Talent of Huishan District.

In 2023, the company reformed its performance appraisal mechanism, distributing annual performance in a combined monthly and annual manner to ensure the consistency between individual goals and the company's strategic goals. Meanwhile, the company has optimized the control of the comprehensive budget, promoted the integration of business and finance, and reduced business operation risks and enhanced its core competitiveness through the continuous improvement of comprehensive budget management.

It is extremely difficult to pursue the ultimate goal, and the original aspiration remains firm over time

The year 2024 is a crucial one for fully implementing and carrying out the spirit of the 20th National Congress of the Communist Party of China, and it is also a key year for Kailong High-Tech to carry forward its strategic transformation and implement the three-year plan for the future. Only with a clear direction can one proceed steadily and far; only by being diligent and down-to-earth can one leave a mark on the rocks! In line with the company's future strategic development, the company will remain confident, adhere to its principles while innovating, and undergo transformation and reform!

The company will continuously strengthen the thinking of value creation, carry out key business breakthroughs in management, technology, products and services, and drive with the dual wheels of "management + technology" to provide customers with high-value products and services. The parent company of Kailong High-Tech, Lanfeng, Baodun, Guanlan, Orison and Xiling, form a six-in-one system, plan for the overall situation and fight a unified battle! Sort out the three important relationships between listed companies and their subsidiaries, functional centers and subsidiaries, and subsidiaries themselves. Based on the actual development of each entity, make up for the deficiencies and coordinate resources.

The original aspiration calls for responsibility, the mission urges us to forge ahead, and hard work and practical actions yield tangible results. Let's join hands and welcome the New Year with greater enthusiasm and firmer confidence. Wish everyone good health, a happy family and a prosperous Year of the Dragon!

Kailong High-Tech Co., LTD

Zang Zhicheng

February 9, 2024