Weiqiao Textile Company Limited provided earning guidance for the interim results for the six months ended 30 June 2022. The board of directors of the Company informed the shareholders of the Company and the potential investors that, based on the unaudited management accounts of the Group for the period from January to June, the Group is expected to record a loss for the interim results for the six months ended 30 June 2022, the main reasons for which are as follows: in the first half of 2022, on one hand, under the adverse impacts of factors including the recurrence of the global COVID-19 pandemic as well as the changes in the textile market supply chain landscape caused by the international trade tensions, the domestic and overseas textile markets continued to weaken, leading to an overall decline in the demand for textile products, which resulted in a corresponding decrease in purchase orders for the Group's cotton textile products and thus a period-on-period decrease in sales volume; and, on the other hand, the Group recorded a substantial increase in production costs for its textile products due to the persistently high price of cotton lint, which is the major raw material for production of the Group's textile products, and an increase in staff costs as compared with the same period last year. Despite the period-on-period increase in the sales prices of the Group's textile products, the Group's textile business recorded gross loss in the first half of the year as such increase in sales prices was exceeded by the sharp increase in the production costs; and in the first half of 2022, although the Group maintained profitability in the electricity business, since the price of coal, which is the major raw material, fluctuated at high price levels, there was a substantial increase in the costs of electricity generation, thereby leading to a decrease in the unit gross profit from electricity generation in accordance with the electricity supply agreement.

Based on the main reasons as aforesaid, the Board expects that the Group will record a loss of approximately RMB600 million to RMB700 million for the six months ended 30 June 2022. The Board will pay close attention to the overall development of the textile industry in China during the second half of the year, and will make timely adjustments to the Group's operation strategy according to the overall situation of the industry, fully utilize its characteristics and advantages, and continue to make great efforts in aspects including management innovation, cost reduction and efficiency improvement, investments in research and development activities as well as green and intelligent manufacturing, in order to enhance its competitiveness in domestic and overseas markets.