Weiqiao Textile Company Limited provided preliminary unaudited group earnings guidance for the year ended 31 December 2022. For the year, the group expects to record a loss for the annual results, the main reasons for which are as follows: in 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 the purchase orders for the group's cotton textile products and thus a period-on-period decrease in the sales volume; on the other hand, the group recorded a substantial increase in the production costs for its textile products as the price of cotton lint, the major raw material for the production of the group's textile products, first increased and then decreased in the year with a period-on-period increase in the average price, and an increase in staff costs as compared with the same period last year. Despite the slight period-on-period increase in the sales prices of the Group's cotton yarn and denim products, the Group's textile business recorded a gross loss in the year of 2022 as such increase in sales prices was exceeded by the sharp increase in the production costs and there was a period-on-period decrease in sales price of grey fabric, resulting in a corresponding increase in the group's inventory provision for decline in value, but such inventory provision for decline in value is not a realised loss; and in 2022, although the group maintained a profit 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 RMB 1.6 billion for the year ended 31 December 2022. The Board will pay close attention to the overall development of the textile industry in China in 2023, and will make timely adjustments to the Group's operation strategy according to the overall situation of the industry, fully utilise 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.