Chairman's Message

II. BUSINESS REVIEW FOR 2024

In 2024, all employees of the Company worked together to focus on the three core businesses in the fields of Integrated Circuits and Digital Technology, New Energy and Telecommunications, and faced various challenges in a proactive manner with “innovation-driven and green development” as its strategic goal. Taking advantage of their own favourable conditions, they managed to seize development opportunities, achieving contrary growth and an encouraging result, and laying a solid foundation for sustainable development in 2025. Throughout 2024, the Company realized a revenue of approximately RMB2,520.0 million, representing a year-on-year increase of approximately 11.7%, and a profit attributable to equity shareholders of the Company for the year of approximately RMB42.2 million, representing a decrease of approximately 39.5% over the corresponding period in the previous year. This fully demonstrates the Company’s continuous improvement in profitability, operational capability, and other development indicators under its business diversification strategy in recent years, reflecting a sound growth momentum.

In July 2024, the Company completed the acquisition of the remaining 49% equity interests in each of Nanjing Zhangyu Information Technology Co., Ltd* (南京掌御信息科技有限公司) (“Nanjing Zhangyu”) and Shanghai Zhangyu Information Technology Co., Ltd.* (上海掌御信息科技有限公司) (“Shanghai Zhangyu”) (Nanjing Zhangyu and Shanghai Zhangyu are subsidiaries of the Company in which the Company indirectly held 51% equity interest prior to the completion of the equity acquisition). Nanjing Zhangyu mainly engages in chips customization services, semiconductor IP authorization services and supply chain services as well as research and development, production and sales of Internet of Things security chips. Shanghai Zhangyu mainly provides security solutions in the fields of blockchain security applications, digital security services, data security governance and digital asset trading platforms. The acquisition of the remaining equity interests in Nanjing Zhangyu and Shanghai Zhangyu allows the Group to gain full control over the management and operations of Nanjing Zhangyu and Shanghai Zhangyu, simplify the decision-making process to effectively implement strategic plans that are in line with the Company’s business objectives. Meanwhile, the Company will also further streamline regulatory reporting and approval procedures and save costs associated with connected transactions involving Nanjing Zhangyu and Shanghai Zhangyu, thereby improving operational efficiency.

1. Integrated Circuits and Digital Technology

Data released by the Semiconductor Industry Association (SIA) of the United States of America on 8 February 2025 indicated that the sales of the global semiconductor reached US$627.6 billion in 2024, representing a year-on-year increase of 19.1%. From a regional perspective, the Americas, China, and Asia-Pacific/all other regions all achieved significant sales growth in 2024, with increases of 44.8%, 18.3%, and 12.5%, respectively, while Japan and Europe markets experienced relatively weak performance, with negative growth of 0.4% and 8.1%, respectively. The global and domestic semiconductor industry chains have emerged from the bottom, with the industry as a whole actively restocking and entering an upward trajectory. Especially under the impetus of AI technology, the Company has a promising prospect for the development in related fields. In the second half of 2024, attributable to the Company’s excellent customer service and stable supply chain system, the revenue of the Integrated Circuits and Digital Technology segment achieved a recovery growth.

For Marketing

The Company provides customers with all-around technical support, covering specification definition, IP selection, tape-out, packaging and testing design verification, ensures a worry-free experience for its customers by offering customized solutions and rapid response services and gains wide recognition from customers. The Company realizes strategic win-win situation with its customers by continuously improving its operations, management and customer service level. The Company has formed a sound reputation in the market and built a stable brand image. The proportion of sales to strategic customers has increased year by year, with customer structure characterized by high quality, efficiency and stability.

For Production and Supply

The Company specializes in the design, development and sales of integrated circuits, while entrusting wafer manufacturing, packaging and testing and other processes to professional wafer manufacturers and packaging and testing manufacturers. By establishing long-term partnerships with global mainstream wafer foundries, the Company ensures a stable supply of raw materials and production capacity, and is equipped with delivery solutions for a number of process nodes, ranging from 12nm to 0.5um. Meanwhile, in the face of external risks such as geopolitics and trade friction, the Company has effectively avoided the risk of potential supply disruption by virtue of its diversified supply chain layout.

For Research and Development

The core members of the Company’s R&D system are composed of experts with senior semiconductor professional background and extensive industrial experience, which focuses on the development of new products, technologies and processes, as well as the improvement of yield and efficiency. Meanwhile, on the basis of independent innovation, the Company actively strengthens cooperation with external organizations such as scientific research institutes, universities or downstream industry giants to foster a sound mechanism of complementary advantages and synergistic development. As of the end of 2024, the Company had 5 authorized invention patents, 4 integrated circuits layout designs, 64 computer software copyrights, 6 industry standards and 1 commercial password certificate.

2. New Energy and Services

Driven by the “dual carbon” targets, China’s new energy industry has ushered in an unprecedented opportunity. In 2024, China’s power generation reached 9.4 trillion kWh, of which clean energy power generation accounted for more than 32%. As a vital component of clean energy, solar thermal power generation serves the dual functions of peaking power sources and energy storage. It is an indispensable technology for China in building a new type pf power system and achieving its energy transformation goals, offering vast market potential for the future.

As of the end of 2024, China’s cumulative installed capacity of completed solar thermal power generation reached 838.2 megawatts (MW), raising its global share to 10.6%. China currently has 34 solar thermal power generation projects under construction, with a total installed capacity of 3,300 MW (most of which are expected to be completed by 2025); and 37 planned solar thermal power generation projects, with a total installed capacity of approximately 4,800 MW.

For Marketing

As a pioneer in the construction, operations and maintenance of domestic molten salt field in China, Zhejiang Zhongguang New Energy Technology Co., Ltd., in which the Company acquired 51% equity interest in the second half of 2023 and its subsidiaries, has been in an industry leading position in the field of solar thermal operations and maintenance, with the cumulative installed capacity of solar thermal power plant projects undertaken and participated in the operations and maintenance thereof exceeding 900MW, ranking among the top in the world. In September 2024, Jinta Zhongguang, Shandong Institute’s Shanshan, Xikan Institute’s Golmud and Zhejiang Thermal Power’s Turpan projects entered the site and commenced their initial operational phase. In November 2024, the Delingha 350MW solar thermal project declared by the Company was successfully selected as the 2024 Solar Thermal Power Generation Demonstration (Pilot) Project of Qinghai Province, which will adopt the tower-type molten salt solar thermal technology, with a planned installed capacity of 350MW and supported by a 14-hour molten salt energy storage system. It is currently the largest tower-type solar thermal project in terms of installed capacity amongst the completed, planned and under-construction projects in the world.

Leveraging its expertise in molten salt heat storage and exchange technology, while vigorously developing the construction and operations of solar thermal power plants, it also focused on the provision of overall solutions and related products for molten salt energy storage scenarios, such as zero-carbon parks, flexible peak-shaving for thermal power plants, energy-saving and peak-valley arbitrage in steel plants, as well as distributed heat storage. In 2024, it won the bidding of the project of steam supply for Qiongke Brewing in Renhuai City, Guizhou Province, and the electric energy storage for green steam supply project of Jujing Ecological Technology Co., Ltd. in Huangyan, Taizhou City.

In addition, the 50MW tower-type solar thermal molten salt power stations has continuously enhanced its public image, and significantly increased its industry influence, with 121 receptions totaling 1,770 person times throughout the year, including 62 receptions totaling 925 person times for governmental units, 6 receptions totaling 118 person times for universities and media, and 52 receptions totaling 727 person times for enterprises (merchants) and others. The Qinghai Daily and other provincial and municipal mainstream media featured special reports titled “Gathering the World’s ‘Light’ in the Qaidam Basin”, “Chasing the Sun and ‘Forging’ a New Path” and “Over Ten Thousand Heliostats ‘Bloom’ in the Gobi Desert”.

For Production and Supply

The Company owns two tower-type solar thermal molten salt energy storage power generation projects in Delingha, Qinghai, with capacities of 10MW and 50MW respectively. Qinghai Zhongkong’s Delingha 50MW solar thermal power station reached a cumulative power generation of 140.2 million kWh in 2024, completing its power generation targets in a steady manner for three consecutive years.

The Company completed two major technological transformations in this year: firstly, the fully automatic one-key start-stop control technology upgrade of the concentrated heat collection system was successfully implemented, enabling the intelligent management and control of the start-stop process of the unit and significantly improving the system response efficiency; secondly, the independently built intelligent cloud monitoring platform, which integrates core functional modules such as remote real-time monitoring, meteorological disaster early warning, customized video inspection and intelligent analysis of theoretical power generation, supports authorized users to realize the visual operations and management of all elements of the power station through the digital twin system. They have effectively improved the intelligent operations and maintenance level and power generation efficiency of the power station, laying a technical foundation for subsequent large-scale popularization and application.

For Research and Development

In line with the market demand and the future development direction of the industry, the Company continued to accelerate the construction of innovation platforms and increase investment in the research and development of new products and new technologies. Currently, it has possessed 3 scientific research platforms above the provincial level, namely “National Local Joint Engineering Research Center for Solar Thermal Power Generation Technology (approved by the NDRC)”, “Qinghai Solar Tower Thermal Power Generation Engineering and Technology Research Center (approved by the Science and Technology Department of Qinghai Province)”, and “Tower Solar Thermal Power Generation Engineering and Technology Research Center (approved by the Development and Reform Commission of Qinghai Province)”. The Company has 22 authorized invention patents, 25 utility model patents, 5 computer software copyrights and 14 industry standards.

3. Telecommunications

With the in-depth advancement of China’s 5G networks construction, 5G networks construction has achieved comprehensive coverage. In 2024, the total number of 5G base stations nationwide exceeded 4 million to reach 4.251 million, and 5G-related investment exceeded RMB200 billion. In 2024, with the continuous scale expansion of data centers, the rapid popularization of emerging applications such as smart homes and the Internet of Things, the market demand for high-performance coaxial cables continued to grow. In 2024, the Company further consolidated its market position in the fields such as telecommunications, radio and television and safety monitoring by virtue of its leading technological advantages and stable product quality. At the same time, the Company has increased its R&D investment in high frequency and high-speed transmission technology, and launched a variety of innovative products, which garnered high recognition from customers.

For Marketing

In 2024, the Company continued to strengthen the customer centralized procurement market. In terms of radio frequency (“RF”) centralized procurement projects, it won the biddings with the excellent results of ranking first in terms of the bidding of feeder wire, leaky cables and accessories, and centralized procurement project of feeder wire and jumper cable organized by China Mobile. In terms of the centralized procurement project of feeder wire and accessories of China Tower, it won the first and second places respectively. In terms of antennas centralized procurement projects, it successfully won the bid for China Mobile’s 2024-2025 special scenario antennas products, multi-frequency base station and high-speed railway antennas products centralized procurement project. The cumulative bid amount of centralized procurement projects in 2024 reached approximately RMB1,195.53 million, which effectively supported the Company’s efficient production facilities to run close to full capacity for a considerable period of time, laying a solid foundation for achieving the annual results targets.

In 2024, the overseas market business achieved a year-on-year growth of 44%. Despite challenges in conducting business in the Commonwealth of Independent States markets and the European and American markets due to the Russian-Ukrainian conflict, growth was achieved in the Southeast Asian market, the Middle Eastern market, the Indian market, and the business with communication equipment manufacturers. Additionally, breakthroughs were made in the emerging markets of South America. With five new operators being shortlisted in 2024, the Company become a qualified supplier for Ericsson in the China region.

For Production and Supply

In 2024, the Company, with “technological innovation, quality priority, efficiency-driven, and sustainable development” at its core, comprehensively improved intelligent and digital capabilities, achieving a cost reduction of over RMB55.0 million during 2024. Meanwhile, the Company actively promoted the deep integration of manufacturing and R&D and enhanced its core competitiveness, providing strong support for the Company’s high-quality development.

For Research and Development

In 2024, the Company intensified its R&D efforts, developed and launched a new type of low-loss 50-42 spread spectrum 3.6GHz leaky cable applied in high-speed rail tunnel scenario and realized mass application. The Company redefined the product structure of feeders and launched the HPALS series of ultra-flexible feeder products, which were accompanied by HPC2.0 standardized installation tools, realizing a new level of innovation and upgrading in high reliability and high efficiency. The Company achieved 27 invention patent authorizations and 4 international patents in 2024, and was honored with the second prize of the 2024 China Quality Awards by China Association for Quality. Throughout the year, the Company undertook 17 R&D projects, with the sales revenue of new products amounted to more than RMB665.0 million. Significant results growth was achieved in 5G expansion antenna series, low-frequency 5G re-farming macro base station antennas, high-efficiency green base station antennas, multi-mode radiation wide high-frequency leaky cable products, and the new generation of waterproof integrable high-frequency cable assembly products.