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Dear colleagues, partners, and friends of Kailong Hi-Tech:

As the Year of the Rabbit bids farewell and the Year of the Dragon arrives, at this beautiful moment of renewal and fresh beginnings, the Board of Directors of Kailong Hi-Tech extends its warmest wishes to all hardworking and dedicated employees and their families, and expresses heartfelt gratitude to leaders, partners, and friends from all walks of life who have supported the company’s development.

Weathering the Storm — Reaping the Harvest

Over the past year, the nation united to restore the economy and accelerate development. Amid the wave of building a new development paradigm, the automotive industry also experienced supply chain adjustments and fierce competition. Under the strategic planning of the management team and the collective efforts of all employees, the company overcame unfavorable macro-environmental factors both domestically and internationally, tackled difficulties with determination and perseverance, and embarked on a new journey of high-quality development. In 2023, the company achieved the following results:

In 2023, benefiting from the surge in the commercial vehicle market — particularly the natural gas heavy-duty truck segment — as well as the implementation of China Stage IV off-road and China 6b light-vehicle emission regulations, Kailong Hi-Tech Group achieved its annual revenue target. Facing pressure from fixed asset depreciation and amortization following the conversion of raised funds into fixed assets, the company continuously optimized its product mix, launched cost-reduction and efficiency-enhancement measures, and improved lean management, achieving a significant improvement in overall gross margin compared to the prior year. Period costs were also reduced year-on-year. Key operating indicators improved steadily, and net profit achieved a turnaround from loss to profit.

In 2023, the company established Jiangsu Guanlan New Materials Technology Co., Ltd., introducing RMB 100 million in industrial funds from the Yangzhou Jiangdu District Government, and fully entered the silicon carbide (SiC) new materials sector to build a SiC new materials industrial park. Simultaneously, the company organized a SiC operations team to comprehensively study and deploy applications of SiC new materials in kiln rollers for the new energy industry, ballistic protection panels for the defense sector, heat exchange equipment in the chemical industry, and silicon powder materials.

In 2023, the company established Jiangsu Orisen Inspection and Testing Co., Ltd. and Jiangsu Xiling Precision Manufacturing Co., Ltd. The company will vigorously expand external markets and take on external orders to grow and strengthen its business.

In 2023, Kailong Lanfeng VOCs business achieved external sales for the first time; Kailong Baoton’s external sales proportion exceeded 60% for the first time; new product R&D lines for air conditioning piping and battery water-cooling units are also about to be put into production.

In 2023, the company obtained national, provincial, and municipal project approvals totaling RMB 9.45 million. The company also successfully obtained key technology innovation projects from the Jiangsu Province and national-level innovation platform qualifications, was approved as a Wuxi Municipal Enterprise Key Laboratory for the first time, and was recognized as a national patent-intensive product enterprise, national patent navigation enterprise, and national intellectual property advantaged enterprise. It was also approved as a Jiangsu Province Internet benchmark enterprise for the first time.